Lowe’s comparable sales data in focus during Q3 earnings

Lowe’s (NYSE:LOW) is set to announce third quarter results on Tuesday, and investors will keep an eye on the sales trend, amid concerns of a slow recovery in home improvement demand.

Wall Street expects the North Carolina-based company to post EPS of $2.81, implying an 8.2% decline, while revenue is expected to fall 2.7% to $19.91 billion.

Home-improvement retailers faced pressure in the first half of the year, as demand for home sales and renovation fell due to high inflation and concerns regarding high-interest rates.

In August, Lowe’s noted the possibility of a 3.5% to 4% decline in comparable sales for the full-year and reduced annual sales forecast.

Seeking Alpha’s Quant Rating and Seeking Alpha analysts are cautious and rated the company as a Hold.

“If we are correct on Q3’24 EPS, we don’t expect the quarter to be a major catalyst in either direction as the market understands the Home Improvement sector is still bouncing along a bottom,” said Morgan Stanley analyst Simeon Gutman.

Earlier in the month, Home Depot’s 1.2% decline in Q3 comparable sales in the U.S. and its warning that consumers are holding back on expensive remodeling projects, also dampened investors’ enthusiasm.

However, Wall Street analysts are still bullish and rated the stock a Buy.

Seeking Alpha analyst Lighting Rock Research anticipates the housing market will gradually normalize as the Fed has started to reduce the interest rate.

“LOW will likely see hurricane-driven demand. In addition, building materials retail sales modestly accelerated both y/y and on a 5-year basis in August and September and LOW could achieve a -2% comp with only modest improvements in underlying trends,” Gutman added.

Over the last one year, LOW has beaten EPS estimates 100% of the time and has beaten revenue estimates 50% of the time.

EPS estimates have seen one upward revision and 26 downward over the last three months, while revenue estimates have seen one upward revision versus 24 downward moves.

Lowe’s stock has gained 21% so far this year, compared to the over 23% rise in the broader S&P500 Index.