Lowe's Stock Is Falling After Earnings. Here's Why
Lowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
Lowe's Companies (LOW) is trading near the bottom of the S&P 500 Tuesday despite the world's second-largest home improvement retailer beating top- and bottom-line expectations for its third quarter and raising its full-year outlook.
In the three months ended November 1, Lowe's revenue decreased 1.5% year over year to $20.2 billion as its comparable-store sales dipped 1.1% on "continued softness in do-it-yourself (DIY) bigger-ticket discretionary demand." Its earnings per share (EPS) declined 5.6% from the year-ago period to $2.89.
"Our results this quarter were modestly better than expected, even excluding storm-related activity, driven by high-single-digit positive comps in Pro, strong online sales and smaller-ticket outdoor DIY projects," said Lowe's CEO Marvin Ellison in a statement.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results topped analysts' expectations. Wall Street was anticipating revenue of $19.95 billion and earnings of $2.82 per share, according to CNBC.
Thanks to its better-than-expected third-quarter results, Lowe's raised its full-year outlook. The company now expects to achieve revenue in the range of $83 billion to $83.5 billion and earnings per share between $11.80 to $11.90. This is an improvement over its previous forecast of revenue in the range of $82.7 billion to $83.2 billion and earnings per share of $11.70 to $11.90.
"Next month at our Analyst and Investor Conference, I look forward to discussing our new growth and productivity initiatives, which underscore our confidence that we are well-positioned to capitalize on the expected recovery in home improvement," Ellison said.
Why is Lowe's stock lower?
David Wagner, portfolio manager at Aptus Capital Advisors, says many folks assumed Lowe's sales would be higher this quarter and that wasn't the case.
"The biggest thing that I was looking for during the quarter was a read-through into following years, which this quarter did not give much indication of what type of EPS earnings power the company could have in 2025 and 2026, and that is what matters for the stock," Wagner wrote in emailed commentary.
Additionally, investors are considering Lowe's results in comparison to Home Depot's (HD) third-quarter report, which was released one week ago. "LOW should have skewed to more favorable conditions than HD," he adds.
Is LOW a buy, sell or hold?
Lowe's, which happens to be one of Wall Street's best dividend stocks for dependable growth, has slightly lagged the broader market in 2024. Indeed, the blue chip stock is up 24.5% on a total return basis (price change plus dividends) for the year to date vs the S&P 500's 25.1% gain. And Wall Street is bullish on LOW.
According to S&P Global Market Intelligence, the average analyst target price for the consumer discretionary stock is $276.18, representing implied upside of nearly 6% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm Argus Research is one of those with a Buy rating on LOW stock, along with a $275 price target.
"We believe that CEO Marvin Ellison is demonstrating the experience and ability to improve operations and raise profitability at Lowe's," said Argus Research analyst Christopher Graja in an August 21 note. "The company has upgraded its business analytics, upgraded its website, and sold the Canadian business, which should lead to better margin performance and higher capital efficiency. LOW also seems to be gaining traction with professional customers."
Related Content
-
We inherited $250K: should we buy a second home or save for college?He wants a vacation home, but she wants a 529 plan for the kids. Who's right? The experts weigh in.
-
The $300,000 Social Security Decision You Could Get WrongDeciding when to claim Social Security is a complex, high-stakes decision that shouldn't be based on fear or simple break-even math.
-
4 Ways Washington Could Put Your Retirement at RiskLegislative changes, such as shifting tax brackets or altering retirement account rules, could affect your nest egg, so it'd be prudent to prepare. Here's how.
-
I'm a Financial Adviser: This Is the $300,000 Social Security Decision Many People Get Wrong
Deciding when to claim Social Security is a complex, high-stakes decision that shouldn't be based on fear or simple break-even math.
-
4 Ways Washington Could Put Your Retirement at Risk (and How to Prepare)
Legislative changes, such as shifting tax brackets or altering retirement account rules, could affect your nest egg, so it'd be prudent to prepare. Here's how.
-
2026's Tax Trifecta: The Rural OZ Bonus and Your Month-by-Month Execution CalendarReal estate investors can triple their tax step-up with rural opportunity zones this year. This month-by-month action plan will ensure you meet the deadline.
-
Is Your Retirement Plan Built for 2026 — or Stuck in 2006?It's time to move away from the 4% rule and the 60/40 portfolio to an adaptable, tax-diversified strategy focused on reliable income and longevity.
-
Filed for Social Security Too Soon? 2 Ways to Get a Do-OverIf you've claimed Social Security too soon, two SSA rules allow a do-over. But be warned: Using them clumsily can lead to surprise repayments or lost benefits.
-
Have You Aligned Your Tax Strategy With These 5 OBBBA Changes?Individuals and businesses should work closely with their financial advisers to refine tax strategies this season in light of these five OBBBA changes.
-
Stocks Close Down as Gold, Silver Spiral: Stock Market TodayA "long-overdue correction" temporarily halted a massive rally in gold and silver, while the Dow took a hit from negative reactions to blue-chip earnings.
-
The New Fed Chair Was Announced: What You Need to KnowPresident Donald Trump announced Kevin Warsh as his selection for the next chair of the Federal Reserve, who will replace Jerome Powell.
