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Lowe’s on the Street: Why Analysts Are Optimistic for 2017

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2017 revenue estimates

Lowe’s Companies’ (LOW) management is expecting its revenue to rise 5% in 2017. Analysts are expecting the company to report revenue of $68.1 billion, which would mean a growth of 4.8% from $65.0 billion in 2016.

The company’s management expects the revenue growth to be driven by SSSG (same-store sales growth) of 3.5% and the addition of about 35 home improvement and hardware stores.

In 4Q16, the company conducted a survey that revealed that many homeowners were of favorable opinion on the US economy and individual financial situation after the elections in November 2016. In the survey, half of the homeowners who participated expressed desire to undertake a home improvement project in the next six months, and more than half believed that housing prices would continue to rise.

The rise in housing prices could encourage homeowners to remodel and upgrade their houses, which could boost Lowe’s sales. Along with these factors, higher housing turnover and the recently improving US economy have prompted the management to set a positive sales growth for 2017.

Apart from these macro factors, Lowe’s enhanced online selling tools, its strong value proposition, and its improved marketing are expected to drive its revenue in 2017.

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Peer comparisons

In 2017, Home Depot (HD), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY) are expected to report revenue rises of 4.4%, 2.8%, and 0.7%, respectively.

In the next part, we’ll look at Lowe’s 4Q16 margins.

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