Lowe’s Companies, Inc. (NYSE: LOW) will report its third-quarter earnings on Tuesday before the market opens, and investors will once again be comparing Lowe’s numbers to the surprisingly strong numbers Home Depot (HD) reported last week.
Analysts are expecting Lowe’s to report earnings per share of $1.01 on revenue of $16.56 billion.
Lowe’s will be coming off a disappointing second quarter in which both earnings and revenue came up short of expectations. Same-store sales growth of 4.5 percent, however, exceeded expectations in the second quarter. Lowe’s has guided for full-year same-store sales growth of 3.5 percent.
Last week, Home Depot surprised Wall Street by topping consensus EPS and revenue expectations in the third quarter. Home Depot also reported same-store sales growth of 7.9 percent, well above consensus estimates of 5.8 percent.
Home Depot said its third-quarter revenue was boosted by $282 million as a result of Hurricanes Harvey and Irma, a tailwind that will likely also boost Lowe’s numbers as well. However, Oppenheimer analyst Brian Nagel says Lowe’s investors shouldn’t expect as big of a bump from the hurricanes as the one Home Depot got.
“Right after Hurricane Irma hit Florida, I visited stores in Miami, and I noticed … Home Depot was much more aggressive in getting these sales than Lowe’s,” Nagel said on CNBC following Home Depot earnings. “I think Home Depot is the better-run company. So if I’m picking one, I’m picking Home Depot, but I like both of them.”
Home Depot’s same-store sales growth has topped Lowe’s growth for six consecutive quarters. Lowe’s stock has also lagged Home Depot stock by a wide margin in 2017, gaining just 12.8 percent compared to Home Depot’s 24.9 percent gain.
Earlier this month, KeyBanc analyst Bradley Thomas said he doesn’t expect Lowe’s business to outshine Home Depot’s this quarter, but he is expecting Lowe’s stock to play a bit of catch-up heading into 2018.
“We believe shares are compelling given the fundamental growth opportunity for the company, and expect LOW shares would warrant multiple expansion if execution improves and comps accelerate,” Thomas said.
KeyBanc is expecting Lowe’s to report EPS of $1.03 on revenue of $16.68 billion. The firm is also forecasting 5 percent same-store sales growth.
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