On Tuesday, Lowe's Companies, Inc. (NYSE: LOW) shares maintained their position with a steady "In Line" rating and a consistent price target of $255.00. The company's third-quarter performance indicated a slight decline in comparable store sales by 1.1%, which was better than anticipated and closely aligned with Home Depot (NYSE:HD)'s 1.2% decline in the U.S. market.
Lowe's managed to surpass earnings expectations by $0.07 per share, largely due to improved management of selling, general, and administrative (SG&A) expenses.
Lowe's has updated its 2024 guidance, raising the lower end of its earnings per share forecast to a range of $11.80 to $11.90, which brackets current street estimates. The forecast adjustment follows a 50 basis points increase in the company's full-year comparable sales outlook, although it has slightly reduced its operating margin guidance by 10 basis points, possibly as a consequence of selling more storm-related products that typically yield lower margins.
The company anticipates that comparable store sales for the fourth quarter of 2024 will be around negative 2%, leading to a full-year operating margin decline of 100 basis points year-over-year to 12.35%.
This revision in the 2024 outlook lifts the lower end of the earnings forecast from $11.70 to $11.80, while the upper limit remains at $11.90. This adjustment is expected to cause analysts to modestly increase their estimates from the current average of $11.83, reflecting the third-quarter earnings beat.
Lowe's third-quarter adjusted earnings per share were $2.89, down 5.6% year-over-year but ahead of the consensus estimate of $2.82. The company outperformed the consensus expectation of a 2.7% decline in comparable store sales. The two-year comparable sales showed an 8.4% drop, which is less severe than the 6.6% decrease in the previous quarter.
Home Depot, for comparison, reported a 1.3% decline in comparable store sales, with a 0.2% two-year growth. Both companies experienced positive professional and online sales, with Lowe's recording a high single-digit positive comp in the professional segment.
Looking forward to the Lowe's Analyst Day scheduled for December 11, there will be further opportunities to discuss the company's projections for 2025. The company's Home Improvement Lead Indicator suggests the possibility of improved comparable sales in the following year.
With strong professional and online sales contributing to the positive full-year outlook, Lowe's expects a fourth-quarter comparable sales range of negative 2% to negative 2.5%, with margins around 9.3% and earnings per share of approximately $1.80, which is closely in line with the street's prediction of $1.81.
In other recent news, Lowe's Companies Inc (NYSE:LOW). has been the focus of several financial firms' attention. TD Cowen has increased its price target for Lowe's to $290 from $270, maintaining a Hold rating, citing the company's strong positioning for the upcoming Home Improvement cycle. Loop Capital has also raised its price target for Lowe's shares to $250, while maintaining a Hold rating.
Telsey Advisory Group has adjusted its price target on Lowe's shares to $275, expressing confidence in the company's Total (EPA:TTEF) Home Strategy. Meanwhile, Oppenheimer upgraded Lowe's stock from Perform to Outperform and increased its price target to $305, recognizing the company's discounted valuation and operational efficiency.
In a different sector, Walmart (NYSE:WMT) and other retail giants are increasingly using advanced weather analytics to adapt to climate change and mitigate its unpredictable influence on shopping trends. Companies such as Walmart, Beiersdorf (ETR:BEIG), and Tractor Supply (NASDAQ:TSCO) have acknowledged the importance of weather data in their planning and decision-making processes.
Weather consulting firms like Meteonomiqs, Planalytics, and Weather Trends International are capitalizing on this growing demand, offering data processing services to help retailers understand the impact of weather on sales.
These are the latest developments for Lowe's and Walmart, reflecting the changing dynamics in the retail and home improvement sectors.
InvestingPro Insights
Lowe's Companies, Inc. (NYSE: LOW) continues to demonstrate resilience in a challenging market, as evidenced by its recent performance and updated guidance. InvestingPro data reveals that Lowe's has a substantial market capitalization of $154.17 billion, underlining its position as a major player in the home improvement retail sector. This aligns with the InvestingPro Tip that Lowe's is a "Prominent player in the Specialty Retail industry."
The company's P/E ratio of 22.37 suggests that investors are willing to pay a premium for Lowe's shares, which may be justified by its long-term performance. An InvestingPro Tip highlights that Lowe's has "maintained dividend payments for 54 consecutive years," demonstrating a strong commitment to shareholder returns. This is particularly noteworthy given the company's ability to navigate through various economic cycles while consistently rewarding investors.
Despite the slight decline in comparable store sales reported in the article, Lowe's financial health appears robust. The company's revenue for the last twelve months stands at $84.02 billion, with a gross profit of $27.9 billion and an operating income of $10.48 billion. These figures support the company's ability to maintain its dividend policy and potentially fuel future growth initiatives.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 8 more InvestingPro Tips available for Lowe's, which could provide valuable perspective on the company's financial position and market outlook.
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