Lowe’s Q1 Earnings: What Are We Watching?

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Lowe's

Lowe’s (NYSE: LOW), a home-improvement retailer, is scheduled to report its fiscal first-quarter results on Tuesday, May 23. We expect the company’s stock to see little to no movement post-first-quarter results – as its revenue is likely to beat but earnings marginally miss the consensus estimates. Lowe’s results in 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 2023. For the full year 2023, Lowe’s indicated it now expects revenue in the range of $88 to $90 billion (compared to almost $97 billion in FY 2022). On the bottom line, its EPS is expected to come in the range of $13.60 to $14.00. Also, comparable sales are expected to be flat to down 2% as compared to the prior year.

Our forecast indicates that Lowe’s valuation is $203 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 Q1? for more details.

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

Trefis estimates Lowe’s Q1 2023 revenues to be around $21.7 Bil, slightly ahead of the consensus estimate.  In Q4, the company’s revenue rose 5% year-over-year (y-o-y) to $22.4 billion. In a challenging macroeconomic environment, Lowe’s posted a 1% decline in comparable-store sales during the quarter. We now forecast Lowe’s Revenue to be about $89 billion for fiscal 2023.

2) EPS likely to be marginally below consensus estimates

LOW’s Q1 2023 earnings per share (EPS) is expected to be $3.44 per Trefis analysis, slightly below the consensus estimate of $3.45. In general, Lowe’s has struggled to close the profitability gap with its arch rival Home Depot. Operating profit margin shrank by two full percentage points in FY 2022 to land at 10.5% of sales. In comparison, Home Depot saw this value grow at 14%, despite slowing sales growth and a shift in demand.

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

Going by our Lowe’s Valuation, with an EPS estimate of around $13.65 and a P/E multiple of 14.9x in fiscal 2022, this translates into a price of $203, which is almost in line with the current market price.

Check out how other Lowe’s Peers fare on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a high-performance portfolio with a low downside instead? Here’s a reinforced value portfolio that has beaten the market consistently while limiting losses during periods of sharp market declines.

 Returns May 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 LOW Return -1% 4% 190%
 S&P 500 Return 1% 9% 87%
 Trefis Multi-Strategy Portfolio 0% 9% 244%

[1] Month-to-date and year-to-date as of 5/22/2023
[2] Cumulative total returns since the end of 2016

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