Lowe's Companies, Inc. is scheduled to release its Q1 2010 results after the market closes on May 16, 2010. The Company believes that the housing correction process is well under way as it cycles through excess housing inventory, with still some more cleansing to go. The employment situation remains a concern and the second half of the year is expected to be better than the first as macro variables continue to stabilize and support home improvement demand.
Lowe's Companies Inc. is a retailer of home improvement products in the world, with specific emphasis on retail do-it-yourself and commercial business customers. Lowe''s specializes in offering products and services for home improvement, home decor, home maintenance, home repair and remodeling and maintenance of commercial buildings. Lowe''s principal customer groups are do-it-yourself retail customers and commercial business customers.
As for the Q4 of 2009, the Company reported net earnings of $205 million, a 26.5% increase from the same period a year ago. Diluted EPS increased 27.3% to $0.14 from $0.11 in the Q4 of 2008. Sales for the quarter increased 1.8 percent to $10.2 billion, up from $10.0 billion in the fourth quarter of 2008. During the quarter, the company repurchased $500 million, or 21.9 million shares, of the company's common stock. The $1.7 billion share repurchase capacity remaining under the Board's 2007 authorization expired at the end of fiscal 2009. In addition, the Board of Directors has authorized the repurchase of up to $5 billion of the company's common stock. During the quarter, Lowe's opened 11 stores. As of January 29, 2010, Lowe's operated 1,710 stores in the United States and Canada representing 193.2 million square feet of retail selling space, a 3.5% increase over last year.
Analysts' estimates for Q1 2010 range from a low of $0.27 to a high of $0.34, compared to a consensus estimate of $0.30, with number of estimates being 25 and the co-efficient variance 5.34. Lowe's is expected to open approximately 11 new stores reflecting square footage growth of approximately 3%. Total sales are expected to increase between 1 to 3%, with comparable store sales to range between a 2% decline and flat. EBIT as a percentage of sales (operating margin) is expected to decline 90 to 100 basis points and depreciation expense is expected to be approximately $400 million. Finally, diluted EPS in the range of $0.27 to $0.29 are expected. Gross margin is expected to be flat to down slightly in Q1 2010 as a percent to sales and the Company plans to incur extraordinary snow removal and building repair expenses that could negatively impact Q1 2010 by 15 basis points. Also, expenses associated with delivering products to customer's homes are expected to de-leverage 10 basis points driven by both more deliveries and higher fuel prices.
The stock closed at $25.31, down 0.82% on May 7, 2010 and most analysts' rate the stock as a relative Overweight with an average price target of $28.00.
