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Factors to Watch Just Ahead of Lowe's (LOW) Q1 Earnings

Zacks Equity Research
·4-min read

Lowe's Companies, Inc. LOW is scheduled to report first-quarter fiscal 2020 numbers on May 20, before the opening bell. In the last reported quarter, the company recorded a positive earnings surprise of 3.3%. Further, its bottom line beat estimates by 1.7%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at $1.32, indicating a rise of 8.2% from $1.22 reported in the year-ago quarter. Further, the consensus mark moved up by a penny in the last seven days. For revenues, the consensus estimate is pegged at $18.17 billion, suggesting an increase of 2.4% from the year-ago quarter’s reported figure.

Key Factors to Note

Gains from investments in technology, impressive merchandise category and strength in the Pro business have been driving Lowe's performance. The company has been on track to enhance its e-commerce platform and ramp up Lowes.com sales, which is expected to have contributed to the top line in the to-be-reported-quarter. Additionally, better process execution, cost-containment efforts and an improvement in the gross margin trend have been catalysts. On its last earnings call, management predicted year-over-year gross margin expansion for first-quarter fiscal 2020.

Lowes Companies Inc Price and EPS Surprise

 

Lowes Companies Inc Price and EPS Surprise
Lowes Companies Inc Price and EPS Surprise

Lowes Companies Inc price-eps-surprise | Lowes Companies Inc Quote

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Moreover, the company’s strong digital presence has been aiding results for a while, which contributed to comparable sales (comps) growth in the past few quarters. It is likely to have benefited from its robust omni-channel capabilities and enhanced digital shopping experience for consumers amid the coronavirus pandemic, which has confined consumers to their homes since mid-March.

In the wake of the coronavirus outbreak, the company has implemented modified store hours and norms for the safety of customers and employees, with stores operating up to 7 p.m. daily. Also, it has implemented social and physical distancing in its stores as well as developed an app that helps monitor foot traffic and limits the entrance of customers in stores. It has also expanded space for Buy Online Pick Up In Store option and returns within its stores. The impacts of the efforts are expected to get reflected in the upcoming results.

However, the impacts of soft demand due to the pandemic during the first quarter of fiscal 2020 cannot be ignored.

Zacks Model

Our proven model conclusively predicts an earnings beat for Lowe’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lowe’s has a Zacks Rank #3 and an Earnings ESP of +4.06%.

Other Stocks With Favorable Combination

The Kroger Co KR currently has an Earnings ESP of +8.48% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation DG presently has an Earnings ESP of +1.25% and a Zacks Rank #2.

GameStop Corp GME currently has an Earnings ESP of +56.70% and a Zacks Rank #3.

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From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
 
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GameStop Corp. (GME) : Free Stock Analysis Report
 
Dollar General Corporation (DG) : Free Stock Analysis Report
 
Lowes Companies, Inc. (LOW) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
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Zacks Investment Research