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Will Lowe’s Outperform Analysts’ Earnings Estimates?

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May. 17 2019, Updated 11:07 a.m. ET

First-quarter estimates

Analysts expect Lowe’s Companies (LOW) to post an adjusted EPS of $1.33 in the first quarter—a rise of 11.8% from $1.19 in the first quarter of 2018. The revenue growth, expanded EBIT margin, and share repurchases will likely drive the company’s EPS during the quarter. However, some of the increase in Lowe’s EPS is expected to be offset by higher interest expenses.

Analysts expect Lowe’s EBIT margin to improve from 8.4% in the first quarter of 2018 to 8.8%. A fall in the company’s selling, general, and administrative expenses and sales leverage from positive SSSG (same-store sales growth) could drive the company’s EBIT margin during the quarter. Increased labor productivity and lower advertising expenses will likely lower the company’s SG&A expenses.

From the beginning of the second quarter of 2018 to the end of the fourth quarter of 2018, Lowe’s repurchased 22.9 million shares for $2.29 billion. As of February 1, the company still had $13.9 billion available under its share repurchase program.

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Peer comparisons

During the same quarter, analysts expect Home Depot (HD) and Williams-Sonoma (WSM) to post EPS growth of 5.1% and 3.7%, respectively. Bed Bath & Beyond’s (BBBY) revenues are expected to fall 76.6%.

Outlook

For 2019, Lowe’s management expects its adjusted EPS to be $6.0–$6.10. For the same period, analysts expect Lowe’s to post an adjusted EPS of $6.05—a rise of 18.7% from $5.10 in 2018.

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