Lowe’s Q3 Earnings: What Are We Watching?

LOW: Lowe's logo

Lowe’s (NYSE: LOW), a home-improvement retailer, is scheduled to report its fiscal third-quarter results on Wednesday, November 16. We expect the company’s stock to see little to no movement post-third-quarter results – as its revenue is likely to beat but earnings miss the consensus estimates. Lowe’s results in the first half of 2022 were disproportionately impacted by its customer mix. The do-it-yourself customer was less eager to spend on remodels and upgrades compared to last year, in part thanks to short-term issues like weather and inflation. The home improvement retailer also lowered its sales outlook for 2022 after revenue declined in the second quarter. The retailer’s sales are expected to land near the low end of its prior outlook – and that its comps will likely fall by about 1% after jumping last year. However, Lowe’s is still on track to take a tiny step toward Home Depot’s industry-leading 15% profit margin in 2022, with an operating income margin of about 13% of sales.

Our forecast indicates that Lowe’s valuation is $212 per share, which is almost in line with the current market price. Look at our interactive dashboard analysis on Lowe‘s Earnings Preview: What To Expect in Q3? for more details.

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(1) Revenues expected to be slightly ahead of consensus estimates

Trefis estimates Lowe’s Q3 2022 revenues to be around $23.5 Bil, slightly ahead of the consensus estimate. Lowe’s reported flat growth in comparable sales with marginal declines in revenue to $27.5 billion in its second-quarter results. We now forecast Lowe’s Revenue to be $97 billion for fiscal 2022.

2) EPS likely to be marginally below consensus estimates

LOW’s Q3 2022 earnings per share (EPS) is expected to be $2.99 per Trefis analysis, slightly below the consensus estimate of $3.10. Lowe’s gross profit margin held steady at about 33% of sales despite soaring costs in Q2. Operating income actually grew higher, rising to 15.4% of sales compared to 15.3% of sales a year ago. That’s impressive considering how other large retailers saw weaker margins.

(3) Stock price estimate in line with the current market price

Going by our Lowe’s Valuation, with an EPS estimate of around $13.55 and a P/E multiple of 15.7x in fiscal 2022, this translates into a price of $212, which is almost in line with the current market price.

It is helpful to see how its peers stack up. LOW Peers shows how Lowe’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Nov 2022
MTD [1]
YTD [1]
Total [2]
 LOW Return 5% -21% 188%
 S&P 500 Return 2% -17% 77%
 Trefis Multi-Strategy Portfolio 5% -18% 223%

[1] Month-to-date and year-to-date as of 11/15/2022
[2] Cumulative total returns since the end of 2016

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