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Lowe’s Beats Analysts’ EPS Estimate but Misses on Revenue

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Fourth-quarter performance

Today, Lowe’s Companies (LOW) posted its fiscal 2018 fourth-quarter results. In the quarter (ended February 1), the company’s adjusted EPS of $0.80 beat analysts’ expectation of $0.79, but its revenue of $15.65 fell short of analysts’ expectation of $15.74 billion. The company’s SSSG (same-store sales growth) of 1.7% also fell short of their expectation of 2.1%.

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Year-over-year revenue growth

Year-over-year (or YoY), Lowe’s revenue grew 1.0% from $15.49 billion, driven by its SSSG and the adoption of new revenue recognition standards. However, some of the growth was offset by the company’s closure of 51 underperforming Lowe’s stores and 99 Orchard Supply Hardware stores. The company’s store count fell YoY to 2,015 at the end of the fourth quarter from 2,152 stores.

EPS growth

In the fourth quarter, Lowe’s had EPS of -$1.03. However, excluding special items, the company had adjusted EPS of $0.80, which represents 8.1% YoY growth from $0.74. The EPS growth was driven by revenue growth, net margin expansion, and share repurchases in the last four quarters. In the quarter, the company’s net margin improved from 4.0% to 4.1%. The company repurchased $3.04 billion in stock last year. Share repurchases lower a company’s number of shares outstanding, boosting EPS.

Outlook

This year, Lowe’s expects its revenue to rise by 2.0%, its SSSG to rise by 3.0%, and its adjusted operating margin to improve by 0.85%–0.95%. It expects diluted EPS of $6.00–$6.10.

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