© Reuters. Lowe’s (LOW) stops at better results than fear, analyst praises cost control
By Senad Karaahmetovic
Shares of Lowe’s (NYSE:) rose about 2% after the home improvement retailer reported mixed results for the second quarter.
LOW adjusted EPS was $4.67 on revenue of $27.48 billion, compared with consensus calling for adjusted EPS of $4.61 on revenue of $28.13 billion. Comparative sales came in at -0.3%, again below the consensus of +2.34%.
Marvin Ellison, President and CEO of Lowe commented, “I am pleased our team has driven improved operating margins and effective inventory management despite low sales. than expected – a clear reflection of our unwavering focus on operational discipline and productivity.”
On a full-year basis, Lowe’s sees EPS at the top end of the $13.10 to $13.60 range, while aggregate sales are expected to end up in the -1% to range. + 1%. Operating margin is also seen near the bottom of the guide – 12.8% to 13%.
Ellison added: “Despite continued macro uncertainties, we remain confident in the long-term strength of the home improvement market and our ability to share.
An Evercore ISI analyst said the results show that LOW has really done a good job of controlling costs.
“Lowe’s had a worse-than-expected second-quarter result of -0.3%, but improved on improved margins despite falling profits. Overall guidance for 2022 suggests that margins are slightly positive in the second half of the year, with additional guidance that operating margins could improve 40% y/y to ~13.0% with gross margin increased slightly,” the analyst wrote in a research note.
A Morgan Stanley analyst said that reaffirmed guidance “against a range of lower end-of-sale sales that means the outlook for profits is ‘upper’ in the second half of the year.”
“Q2 earnings and full-year outlook are good in absolute terms and market expectations are solid versus bearish,” the analyst added.