Lowe’s Lifts Guidance But Not Enough for Wall Street

I recently said that Lowe’s (LOW) and Home Depot (HD) were nearly tied as investments but I gave a slight edge to Home Depot. Lowe’s reported first-quarter earnings this morning and while the results were good and the company raised guidance, it wasn’t as much as the Street hoped for:

The company, based in Mooresville, N.C., said it earned $489 million, or 34 cents a share, in the three-month period ended April 30. In the same period last year the Mooresville, N.C., company earned $476 million, or 32 cents a share.
Revenue rose 4.7 percent to $12.39 billion.
The results handily beat the expectations of analysts. According to Thomson Reuters, analysts expected the company to earn 31 cents a share on revenue of $12.24 billion.
(…)
For the second quarter and full year, Lowe’s said it expects revenue to rise between 5 percent and 7 percent over the prior year and revenue at stores open at least a year to grow between 2 percent and 4 percent. Previously for the year, the company expected sales to rise between 4 percent and 6 percent, and revenue at stores open at least a year to increase 1 percent to 3 percent.
The company expects second-quarter earnings per share to range from 57 cents to 59 cents, shy of the 62 cents a share analysts expect.
For the full year, Lowe’s now expects earnings per share to range from $1.37 to $1.47. Previously it had expected a range of $1.30 to $1.42. Analysts expect earnings per share of $1.45 for the year on revenue of $49.67 billion, according to Thomson.

The stock is now down to $24.71 as I write this which works out to 17.4 times this year’s earnings. That seems like a fair price. Lowe’s is neither a screaming bargain nor overpriced. Home Depot reports tomorrow.

Posted by on May 17th, 2010 at 10:12 am


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