Lowe’s jumps 6% on stronger than expected Q1 earnings report but suspends full-year guidance

Lowe’s jumps 6% on stronger than expected Q1 earnings report but suspends full-year guidance
  • Lowe's tops analysts' estimates for earnings and revenue in the first quarter.
  • The American retailer suspends full-year guidance on rising COVID-19 uncertainty.
  • The home improvement retailer boasts £4.88 billion in cash and investment securities.

Lowe’s (NYSE: LOW) released its quarterly earnings report on Wednesday that posted stronger than expected earnings and revenue. The company also withdrew its full-year guidance for 2020 on rising Coronavirus uncertainty. The pandemic, Lowe’s added, increased its expenses by £203.57 million including a special bonus for full-time employees.

Shares of the company were reported roughly 6% up in premarket trading on Wednesday. At £94.90 per share, the retailer is currently about 3% down year to date in the stock market. Lowe’s U.S competitor, Home Depot, also released its quarterly results on Tuesday.

Lowe’s Q1 financial results versus analysts’ estimates

According to Refinitiv, analysts were expecting the company to print £14.91 billion in revenue in the first quarter. In terms of earnings per share (EPS), their estimate was capped at £1.07. In its report on Wednesday, Lowe’s topped both estimates posting a higher £16.02 billion in revenue in Q1 and £1.44 of adjusted earnings per share.

Experts had also forecast the retailer’s same-store sales to register a 3.3% growth in the recent quarter versus a significantly higher 11.2% growth in comparable-store sales that it recorded on Wednesday.

As per Lowe’s,

At £1.09 billion, Lowe’s net income in the first quarter came in stronger than £850 million in the same quarter last year. The U.S home improvement retailer noted £14.44 billion in revenue last year.

As of 15th April, Lowe’s had £4.88 billion in cash and investment securities. The retailer also boasted an undrawn revolving credit facility worth £2.44 billion after recently increasing its capacity by around £627 million. The U.S company also raised £3.26 billion in debt to further shore up finances and cushion the economic blow from COVID-19.

Lowe’s repurchases £771 million worth of shares in Q1

According to Lowe’s, its dividend payments were valued at £342 million in the recent quarter. The company also resorted to repurchasing £771 million worth of shares in Q1. Lowe’s, however, suspended its share repurchase programme for the rest of 2020.

Lowe’s nationwide stores met the government’s definition of essential retail and remained opened amidst the Coronavirus outbreak that has so far infected more than 1.5 million people in the United States and caused over 93,500 deaths.

The impact of the flu-like virus started of Lowe’s stock in late February and ended in a year to date low of £53 per share in March. Its performance in 2019 was reported largely upbeat with an annual gain of about 30%.

Lowe is currently valued at £71.87 billion and has a price to earnings ratio of 21.30.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.
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