Lowe’s Revenue Beats Consensus, Growth On Track For FY 2019?

by Trefis Team
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Lowe’s (NYSE: LOW) announced its Q1 2019 (ended April 2019) results on May 22, 2019, followed by a conference call with analysts. The company beat consensus for revenue which was recorded at $17.7 billion, up by 2.2% y-o-y. The increase was driven largely by growth in comparable sales by 3.5% (4.2% in the US).  The earnings missed consensus and was recorded at $1.31, higher than the $1.19 per share in the same period of 2018.



Lowe’s reported $71.3 billion in Total Revenues in Fiscal year 2018.  The revenue comes from the sale of home improvement supplies like tools, construction products, and related services.


We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Lowe’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019? In addition, here is more Consumer Discretionary data.


Key Factors Affecting Earnings:

Revenue to grow:

  • The company has seen revenue fluctuating over the quarters. In-spite of the fluctuations the company has seen a revenue growth in all quarters of FY 2018 vis-à-vis the same quarters of FY 2017. In Q1 2019 (ended April 2019) revenue was recorded at $17.7 billion, up 2.2% y-o-y
  • The company’s revenue growth is mainly contributed by the revenue per square foot metric. It has increased from $305 in 2016 to $340 in 2018. Trefis estimates the metric will reach $349 by 2019.
  • The number of stores and square footage per store metrics have remained nearly flat for a few years now and are expected to continue in the same manner in 2019.

Trend in Expenses:

  • Cost of Sales has been steady at around 67% of Total Revenue over the quarters except Q4 2017 (ended January 2018) and Q4 2018 (ended January 2019) where it crossed 70%. In Q1 2019 (ended April 2019) the metric stood at 68.5%.
  • Selling, General & Administrative expenses contributed more than 25% of Total Expenses in FY 2018 but came down to about 23.1% in Q1 2019 (ended April 2019).
  • Lowe’s saw a fall in EBITDA margin as SG&A expenses increased by $3 billion in FY 2018.
  • Further, Indirect expenses decreased in FY 2018 as income tax provisions came down by nearly $1 billion. In FY 2019 we expect EBITDA margin to recover and indirect expenses to remain flat.

Full Year Outlook:

  • For the full year, we expect gross revenue to increase by 2.1% to $72.8 billion in FY 2019.
  • EBITDA margin is expected to increase to around 9.5%.


Trefis has a price estimate of $113 per share for Lowe’s stock. The value is based on the expectations of rise in comparable sales across its stores and improvement in EBITDA margin.



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