Lowe’s Earnings: Here’s Why Investors Bid Shares Higher

S&P 500 (NYSE:SPY) component Lowe’s Companies Inc. (NYSE:LOW) reported its results for the third quarter. Lowe’s Companies is a home improvement retailer offering products to homeowners, renters, and commercial business customers.

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Lowe’s Companies Inc. Earnings Cheat Sheet

Results: Net income for the building products-retail/wholesale rose to $396 million (35 cents per share) vs. $225 million (18 cents per share) in the same quarter a year earlier. This marks a rise of 76% from the year-earlier quarter.

Revenue: Rose 1.9% to $12.07 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Lowe’s Companies Inc. fell in line with the mean analyst estimate of 35 cents per share. It fell short of the average revenue estimate of $12.98 billion.

Quoting Management: “We are keenly focused on improving our core business,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “Our level of execution is improving and we delivered solid results in the third quarter. I would like to thank our employees for their continued dedication and customer focus.

Key Stats:

The company met estimates last quarter after falling short of forecasts in the previous quarter with net income of 65 cents versus a mean estimate of net income of 70 cents per share.

Margins rose in the second quarter after falling the quarter before. Gross margins grew to 34.3%, up 0.3 percentage point from the year-earlier quarter. In the first quarter, the figure rose 0.6 percentage point to 33.9% from the year earlier quarter.

Net income has increased 9.8% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 76% from the year-earlier quarter.

Revenue rose last quarter after seeing a drop the quarter before. Revenue fell 2% to $14.25 billion in the second quarter from the year earlier.

Looking Forward: Over the past ninety days, the average estimate for the fourth quarter has fallen from 25 cents per share to 20 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $1.66 per share, down from $1.79 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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