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Lowe's shares jump 12.3% as fiscal Q2'19 earnings top expectations

Lowe's Cos. Inc. reported better-than-expected earnings for its fiscal second quarter on Aug. 21 boosted by stronger demand across all regions of the U.S. market and said it expected total sales to increase by about 2% for the full year.

The home improvement company said adjusted diluted EPS for the second quarter ended Aug. 2 rose to $2.15 from $2.07 in the second quarter of 2018. The figure excludes $14 million of pretax losses related to the wind-down of its Mexico business. The Mooresville, N.C., company was expected to report normalized EPS of $2.00 according to consensus analyst estimates compiled by S&P Global Market Intelligence.

Lowe's shares were 12.3% higher to $109.95 in premarket trading on the New York Stock Exchange.

Net earnings for the latest quarter were $1.68 billion, compared with $1.52 billion in the year-ago period, Lowe's said.

Sales for the second quarter rose 0.5% to $20.99 billion from $20.90 billion, in line with analyst expectations. Comparable sales rose 2.3% and comparable sales for the U.S. home improvement business increased 3.2%.

"We capitalized on spring demand, strong holiday event execution and growth in paint and our pro business," said Marvin R. Ellison, president and CEO, in a statement. "Despite lumber deflation and difficult weather, we are pleased that we delivered positive comparable sales in all 15 geographic regions of the U.S."

Similar problems have weighed on Lowe's main rival, Home Depot Inc., which reported earnings on Aug. 20 that beat analyst expectations but also cut its sales guidance for 2019 due to lumber price deflation and the potential impact of tariffs.

In its outlook for the fiscal year ending Jan. 31, 2020, Lowe's reiterated expectations that total sales will rise about 2%, while comparable sales are projected to rise about 3%. It also forecast diluted EPS in the range of $5.54 to $5.74 and adjusted diluted EPS in the range of $5.45 to $5.65.