Lowe’s Raises EPS Guidance Following Solid Q1 Earnings

Lowe’s Companies Inc. (NYSE: LOW) reported first-quarter 2016 results before markets opened Wednesday. The home improvement retailer posted diluted earnings per share (EPS) of $0.90 and $15.2 billion in revenues. In the same period a year ago, Lowe’s reported EPS of $0.70 on revenue of $14.1 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.85 and $14.87 billion in revenue.

Same-store sales increased 7.3% in the quarter and rose 7.5% for U.S. stores. Net income rose 31.4% in the quarter to $884 million.

Excluding one-time items, including an unrealized gain on a currency hedge, Lowe’s earnings totaled $0.87 per share.

In its guidance, the company pegged full-year 2016 sales to rise about 6% year over year, and same-store sales are expected to increase 4%. Diluted earnings per share are forecast at around $4.11, up from a prior forecast of about $4.00. The consensus analysts’ estimate for EPS is currently $4.00 and the revenue estimate is $62.8 billion.

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Lowe’s CEO, Robert Niblock, said:

We executed well in the quarter, growing both transaction and average ticket to achieve comparable sales growth that exceeded our expectations. We continued to focus on providing better omni-channel customer experiences, and saw strength in indoor as well as outdoor categories.

The company also said it repurchased $1.2 billion worth of stock under its share buyback program and paid $255 million in dividends in the first quarter.

Like competitor Home Depot, Lowe’s turned in a good quarter, easily beating Retail Metrics’ same-store sales estimate of 5%. As we noted Tuesday, home remodeling and repair estimates are strong for the rest of this year and into 2017.

Shares of Lowe’s closed down about 1.2% on Tuesday, at $76.07, in a 52-week range of $62.62 to $78.13. The stock traded up about 2.2% in Wednesday’s premarket session at $77.70. Thomson Reuters had a consensus analyst price target of $84.25 before the results were announced. The highest price target is $94.00.