Home-improvement superstar Home Depot
What analysts say:
- Buy, sell, or waffle? Nineteen analysts follow Lowe's, down one from last quarter. Twelve of them rate Lowe's a buy, and seven more a hold
- Revenue. Wall Street expects to see sales rise 5% to $11.78 billion.
- Earnings. Profits are predicted to fall 11% to $0.41 per share.
What management says:
Lowe's gave its investors a glimpse into the future at its 2007 Analyst and Investor Conference in September, and fellow Fool Larry Rothman wondered whether its foundation was still cracked. By now, everyone knows about the difficulties facing the housing market, as homebuilders such as Pulte
What management does:
Yet Lowe's continues to make the best of a very bad situation. The firm has held steady or improved its rolling gross margin in every quarter for the past year, and last quarter even managed to shore up its net and improve its operating margins.
5/06 |
8/06 |
11/06 |
2/07 |
5/07 |
8/07 |
|
---|---|---|---|---|---|---|
Gross |
34.4% |
34.3% |
34.4% |
34.5% |
34.5% |
34.8% |
Operating |
11.2% |
11.2% |
11.3% |
11.0% |
10.6% |
10.7% |
Net |
6.7% |
6.7% |
6.7% |
6.6% |
6.4% |
6.4% |
One Fool says:
Chief Financial Officer Robert Hull opined that 2008 will probably be another slow year for Lowe's, with sales growing only in the mid-single digits. On average over the next three years, however, Lowe's believes it can grow its sales at an 8% to 11% clip, and its earnings at 12% to 15% per year -- suggesting further margin improvements. Cash flows from operations are expected to grow faster than earnings, because of working capital initiatives.
Mid-teens profits growth on a stock currently selling for just 12 times trailing earnings? For investors with patience, this stock just might be worth waiting around for.
For the latest lowdown on Lowe's, read: