Lowe’s Companies, Inc. (NYSE: LOW) beat Wall Street’s expectations for earnings and revenue in the third quarter on Tuesday, but the stock traded lower as Lowe’s once again failed to match Home Depot ( HD).
Lowe’s reported third-quarter earnings of $1.05 per share, excluding items, on revenue of $16.77 billion. Analysts had been expecting EPS of $1.02 and revenue of $16.59 billion.
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Same-store sales growth of 5.7 percent also topped consensus expectations of 4.6 percent.
Lowe’s CEO Robert Niblock says the company is making strides to pursue its omni-channel sales initiative. “During the third quarter, we drove traffic in-store and online with compelling messaging and integrated customer experiences,” Niblock says.
Lowe’s overall numbers for the quarter were impressive, but Oppenheimer analyst Brian Nagel says LOW stock will forever be judged by the Home Depot standard.
“Looking at Lowe’s in isolation, this was a good quarter, but once again it’s not as good as what Home Depot reported a week ago,” Nagel says.
Home Depot reported third-quarter same-store sales growth of 7.9 percent.
Like Home Depot, Lowe’s got a boost in the third quarter from disaster-related sales due to Hurricanes Irma and Harvey and wildfires in California. Lowe’s said the disasters contributed roughly $200 million to the company’s total sales in the third quarter.
Unfortunately for Lowe’s investors, the company chose to maintain its full-year guidance for 5 percent sales growth and 3.5 percent same-store sales growth in 2017.
Nagel says Lowe’s tends to set conservative guidance to allow them as much room to beat expectations as possible.
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“If they beat in Q3 and they didn’t raise guidance, I don’t know that I’d necessarily read into that that they’re expecting some type of slowdown, but that probably implies that they’re essentially trying to set that bar a little bit lower for themselves and hopefully beat results again,” he says.
Oppenheimer maintains “outperform” ratings on both Home Depot and Lowe’s stocks.
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Lowe’s Companies, Inc. (LOW) Guidance Is a Big Disappointment originally appeared on usnews.com
