The company said full-year sales are expected to rise 4.5% to 5.0% year-over-year and same-store sales are pegged to increase 3.5% to 4.0%. Diluted earnings per share are forecast at approximately $2.68. The consensus analysts’ estimate for EPS is currently $2.63, and the revenue estimate is $55.78 billion. The company now estimates a minimum of around $55.82 billion, so investors are likely to take a shine to the stock Wednesday.
Lowe’s CEO said:
We are pleased with our performance, and continue to be cautiously optimistic about the home improvement landscape.
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The company said it repurchased $900 million of stock under its share buyback program and paid $229 million in dividends in the third quarter. For the first nine months of fiscal 2015, the company repurchased $2.9 billion of stock under its share buyback program and paid $597 million in dividends.
We noted in our preview of earnings for Lowe’s that Oppenheimer increased Lowe’s price target to $70 from $60, which implies an upside of about 20% from current levels. The firm also has a fiscal year 2016 EPS forecast for Lowe’s of $3.70, compared to a street estimate of $3.62. Oppenheimer also noted that contrary to conventional market wisdom, the shares of both Lowe’s and competitor Home Depot Inc. (NYSE: HD) tend to perform well and even outperform the S&P 500 through the early to mid-stages of Fed tightening cycles. The home improvement megastores only languish as hikes to the Fed funds rate taper and investors focus on the potential for economic weakness.
When Home Depot reported results on Tuesday, it said that its EPS forecast includes approximately $34 million related to costs of the data breach it reported earlier this year. Home Depot also said that it does not know what the final tally could be and the costs could have a material effect on the company’s results in the fourth quarter and may drag on into future quarters. The boost to the company’s EPS guidance combined with beating estimates on both earnings and revenues is offset by the uncertainty regarding the cost to the company of the data breach that resulted in the theft of 56 million customer records. The $34 million cost attributed to the third quarter is most likely the beginning, not the end of the costs to Home Depot.
Shares of Lowe’s were up about 4.1% to $60.95 in premarket trading Wednesday, above the 52-week range of $44.13 to $59.16. Thomson Reuters had a consensus analyst price target of around $58.00 before the results were announced.
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