Can Lowe’s Outperform the Analysts’ Earnings Estimate?
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.
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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 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.
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.