How Lowe's Hopes to Become No. 1

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

On Wednesday, Lowe's (NYSE: LOW  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Lowe's has played the role of sidekick to industry leader Home Depot (NYSE: HD  ) for a long time, with Home Depot having earned a spot in the Dow Jones Industrials while Lowe's has languished behind. Yet despite having a market cap just half Home Depot's size right now, Lowe's has plenty of growth opportunities that could help it catch up with its archrival. Let's take an early look at what's been happening with Lowe's over the past quarter and what we're likely to see in its quarterly report.

Stats on Lowe's

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$13.45 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Did Lowe's earnings get chilly this quarter?
Analysts have largely stuck by their views on Lowe's earnings, cutting just a single penny from their estimates for the just-ended quarter and the current fiscal year. The stock has done fairly well, rising about 8% since mid-February.

Lowe's has a much longer history of serving the home-improvement market than many investors realize. Even though the company has seen plenty of up and down cycles, Lowe's has managed to earn a spot among the Dividend Aristocrats by raising its annual dividend every single year for the past half-century. More recently, Lowe's has accelerated its dividend growth pace, with its payout having almost doubled in just the past five years.

But Lowe's hasn't done a good job of matching up against Home Depot's strength. While Home Depot has incorporated better use of its workers' skill sets and greater use of innovative technology to help improve efficiency and boost profits from its commercial customers, Lowe's has faced the headwinds of weakness in the appliance space and other pure do-it-yourself project materials.

Moreover, some investors worry that the huge run-up in Lowe's stock price already indicates overheated expectations for the retailer. Earlier today, Oppenheimer downgraded the stock, maintaining its favorable price target on Lowe's but removing its buy rating in advance of the earnings release.

Still, Lowe's expects the good times to continue and is taking steps to capitalize, with plans to hire 9,000 permanent part-time employees. CEO Robert Niblock believes that the recent rebound in home prices is finally making customers willing to spend on improving their homes, and it expects to see greater remodeling activity in the near future.

In Lowe's earnings report, look closely at the impact of a fairly cold start to the spring season on its sales of garden and outdoor materials. Wal-Mart (NYSE: WMT  ) already identified the weather as a factor in its weak quarterly report, and many of its stores have extensive lawn and garden offerings. If Lowe's follows suit, it could prove to be the catalyst that sends the stock falling from its heights, at least temporarily.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Click here to add Lowe's to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 21, 2013, at 4:03 AM, KevinniveK wrote:

    Crap article - wtf does headline have to do with what u wrote - more Mötley Crap

  • Report this Comment On May 21, 2013, at 8:53 AM, picker357 wrote:

    you forgot you very important item. my last and i mean my very last trip to Lowes I wondered thru out the store looking for my needed item, all the employees would walk right by me not making eye contact because they were afraid i might ask for help... i will not return to Lowes, i get great service elsewhere.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2442943, ~/Articles/ArticleHandler.aspx, 10/1/2016 1:02:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 3 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:03 PM
LOW $72.21 Up +0.20 +0.28%
Lowe's CAPS Rating: ****
HD $128.68 Up +0.75 +0.59%
Home Depot CAPS Rating: ****
WMT $72.12 Up +1.39 +1.97%
Wal-Mart Stores CAPS Rating: ***