Earnings Preview: Lowe's

Lowe's Companies (LOW) is expected to report Q3 earnings before market open Monday Nov. 17, with a conference call scheduled for 9:00 am ET.

Guidance

Analysts are looking for a profit of 28c on revenue of $11.62B. The consensus range is 25c to 32c for EPS, and revenue of $11.34B to $11.75B, according to First Call. In September, Lowe's reiterated prior FY08 guidance for EPS of $1.48 to $1.56 vs. First Call consensus of $1.51 on total sales growth of approximately 1% and a decline in same-store sales of 6% to 7%. The company said it expects to open approximately 120 stores in 2008 reflecting total square footage growth of 7 to 8% and forecast FY09 EPS $1.40 to $1.65 vs. First Call consensus of $1.44 on revenue growth of 2.5% to 6.5% and sees SSS down 3% to up 1%.

Analyst Views

Robert F. Hull, Jr., CFO, commented that while "Challenges certainly remain," the company is confident in its ability to deliver on both sales and earnings targets for 2008. Looking into FY09, uncertainty regarding the macroeconomic environment, including disruption in the housing and financial markets as well as the pressures on consumer spending growth, "suggest it is prudent to remain cautious in our 2009 outlook."

While Credit Suisse believes a deep consumer recession will continue through mid-2009, the firm calls Lowe's a "franchise winner," explaining that macro weakness should help reduce the competitive pressures as others close. The firm says leading franchises like Lowe's have strong and stable cash flows, and their stocks tend to outperform not just early in the cycle but also when the outlook seems the weakest.