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What Can You Expect from Lowe’s 2Q17 Earnings?

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Part 4
What Can You Expect from Lowe’s 2Q17 Earnings? PART 4 OF 6

Can Lowe’s Outperform the Analysts’ Earnings Estimate?

2Q17 estimates

For 2Q17, analysts are expecting Lowe’s Companies (LOW) to post EPS (earnings per share) of $1.61, which would mean growth of 17.5% from $1.37 in 2Q16. This EPS growth is expected to be driven by revenue growth, expanding net margins, and share repurchases.

Can Lowe&#8217;s Outperform the Analysts&#8217; Earnings Estimate?

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From the beginning of 3Q17 until the end of 1Q17, Lowe’s repurchased 37.9 million shares at a cost of $3.02 billion, and by the end of 1Q17, the company had $3.80 billion under its share repurchase program.

Remember, share repurchases reduce the number of shares outstanding and boost a company’s EPS.

Notably, Lowe’s has outperformed analysts’ estimates only once in the past five quarters. When a company beats the analysts’ estimates, its stock price tends to rise.

Peer comparisons and outlook

For the same period, Home Depot (HD) posted EPS growth of 14.2%, while the EPS of Bed Bath & Beyond (BBBY) and Williams-Sonoma (WSM) are expected to rise -14.6% and 1.7%, respectively.

For 2017, Lowe’s management has its EPS guidance at $4.30, which would be a growth of 8% from $3.98 in 2016. For the next four quarters, analysts are expecting LOW to post EPS of $4.75, which would be a growth of 14.7% from $4.14 in the corresponding quarters of the previous year.

Dividends

On June 2, 2017, Lowe’s announced a dividend of $0.41 per share, which was paid on August 9, 2017. The dividends were paid at a dividend yield of 2.2% and a payout ratio of 35.5%.

Next, we’ll look at Lowe’s valuation multiple.

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