Lowe’s (LOW) posted its fourth-quarter earnings on February 27. For the quarter ending on February 1, the company posted an adjusted EPS of $0.80 on revenues of $15.65 billion. The company’s revenues grew 1.0% YoY (year-over-year), while its adjusted EPS rose 8.1%.
During the fourth quarter, Lowe’s outperformed analysts’ EPS expectation of $0.79. However, the company’s revenues fell short of analysts’ expectation of $15.74 billion. The company’s SSSG (same-store sales growth) for the quarter was 1.7%, which didn’t meet analysts’ expectation of 2.1%. In the United States, the company posted an SSSG of 0.9% in November, 1.4% in December, and 5.8% in January.
Lowe’s improving SSSG in the United States and management’s strong economic outlook for the US in 2019 might have increased investors’ confidence. Investors’ confidence likely led to a rise in Lowe’s stock price. By the end of February 27, Lowe’s was trading at $107.62, which represents a rise of 2.5% from the closing price the previous day.
After Lowe’s lost 0.6% of its share value in 2018, the company started 2019 on a stronger note. Lowe’s stock price has returned 16.5% YTD (year-to-date) as of February 27. During the same period, Home Depot (HD), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY) have returned 6.9%, 16.8%, and 45.9%, respectively. The SPDR S&P Homebuilders ETF (XHB), which invests ~22% of its holdings in home improvement and furnishing companies, has returned 19.5% YTD.
In this series, we’ll analyze Lowe’s performance in the fourth quarter compared to analysts’ expectations. We’ll also discuss management’s guidance and analysts’ expectations for 2019. We’ll discuss Lowe’s valuation multiple and analysts’ recommendations. Next, we’ll discuss Lowe’s fourth-quarter revenues.