Will Lowe’s Stock Trade Lower Post Q3 Results?

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Lowe’s (NYSE: LOW) is scheduled to report its fiscal third-quarter results on Wednesday, November 17. We expect the company’s stock to trade lower post-third-quarter results – as its revenues and earnings are likely to miss consensus estimates marginally. In the upcoming quarter, risks regarding the growing Delta variant outbreaks could increase the costs in terms of sanitization, supply chain, and labor. This could, in turn, pinch its net profit in Q3 to a little extent. Our forecast indicates that Lowe’s valuation is $210 per share, which is almost 11% lower than the current market price of $235. Look at our interactive dashboard analysis on Lowe’s Pre-Earnings: What To Expect in Q3? for more details.

(1) Revenues expected to marginally miss the consensus estimates

Trefis estimates Lowe’s Q3 2021 revenues to be around $21.8 Bil, slightly lower than the consensus estimate of $22 Bil. Lowe’s revenues grew slightly year-over-year (y-o-y) to $27.6 Bil, on the back of topping comparable sales expectation in Q2 (-1.6% vs. -1.9% consensus) – considering the tough comparison the company was up against last year. However, the comp sales grew 32% for the total company and its sales increased 21% on a two-year basis. It should be noted that a robust 21% y-o-y growth in Lowe’s professionals, a 10% rise in installation services, and a 7% jump in e-commerce sales also contributed to the Q2 2021 gains.

2) EPS likely to come in below the consensus estimates

Lowe’s Q2 2021 earnings per share is expected to be $2.32 per Trefis analysis, marginally lower than the consensus estimate of $2.36. The home improvement retailer delivered a healthy earnings beat in Q2, up 14% year-over-year (y-o-y), as it saw a significant operating margin expansion.

For full-year 2021, we now forecast sales to come at $93 billion for fiscal 2021, up 4% y-o-y. Looking at the bottom line, we now forecast EPS to come in at $11.34.

(3) Stock price estimate lower than the current market price

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Going by our Lowe’s Valuation, with an EPS estimate of around $11.34 and P/E multiple of 18.6x in fiscal 2021, this translates into a price of 210, which is 11% lower than the current market price.

There are several stocks that look like a Better Bet Than LOW stock. For further comparison among peer groups, it is helpful to see how they stack up. LOW Stock Comparison With Peers shows how Lowe’s compares against peers on metrics that matter.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.

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