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Lowe's: Investors Are Confident before Its 1Q17 Earnings

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Part 2
Lowe's: Investors Are Confident before Its 1Q17 Earnings PART 2 OF 7

Analysts Expect Lowe’s Revenue to Rise in 1Q17

Revenue estimates

Analysts expect Lowe’s (LOW) to post revenue of $16.9 billion in 1Q17, which represents growth of 11.1% from $15.23 billion in 1Q16.

Analysts Expect Lowe&#8217;s Revenue to Rise in 1Q17

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Revenue growth

Revenue growth is expected to be driven by positive same-store sales growth, the acquisition of RONA in May 2016, and an increased number of stores. By the end of 4Q16, the company operated 2,129 stores—compared to 1,860 in 1Q16.

Analysts expect Lowe’s same-store sales growth to be driven by the rollout of interior project specialists across all of its US stores, the redesign of its website with advanced features, and the launch of “lowesforpros.com”—another website for professional customers. The company’s management also expects the omnichannel kitchen, bath, and outdoor segments to do well during 1Q17—they offer superior value, compelling content, and unique customer touch points.

Also, improvement in macroeconomic factors—such a rise in the housing price index, lower unemployment, and an increase in home sales—are expected to drive the company’s revenue in 1Q17.

Peer comparisons

In 1Q17, Home Depot (HD), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY) are expected to post revenue growth of 4.1%, 0.7%, and 2.1%, respectively.

Outlook

For 2017, analysts expect Lowe’s to post revenue of $68.32 billion—growth of 5.1% from $65.02 billion in 2016. Revenue growth is expected to be driven by same-store sales growth of 3.5%, the addition of 35 new stores, and increased sales from the acquisition of RONA. The company’s management set revenue growth guidance of 5% for 2017.

Next, we’ll look at Lowe’s margins for 1Q17.

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