Driven by resurgence in the U.S. housing market,
Lowe's Companies Inc
) posted robust results for the third quarter of fiscal 2013,
with adjusted earnings rising 19.2% year over year to 31 cents
per share. Moreover, quarterly adjusted earnings were in line
with the Zacks Consensus Estimate.
On a reported basis, that is, including a charge of 2 cents
related to long-lived asset impairments, the company's
fourth-quarter earnings came in at 29 cents per share.
The stock witnessed a 5.6% rise in total revenue to $11,660
million and handily beat the Zacks Consensus Estimate of $11,645
million. Moreover, comparable-store sales rose 3.9% on a
consolidated basis in the quarter.
The year-over-year top-line growth was primarily driven by the
company's effective capitalization of the rebounding domestic
housing market. During the quarter, Lowe's witnessed solid
performance in its home improvement business.
In dollar terms, gross profit rose 6.8% year over year to
$4,042 million. Moreover, gross profit margin improved 40 basis
points to 34.67% mainly due to lower cost of sales as a
percentage of net sales.
Fiscal 2013 Performance - A Synopsis
The company generated net sales of $53,417 million in the
quarter, up 5.7% from $50,521 million in fiscal 2012. Moreover,
the company's net sales beat the Zacks Consensus Estimate of
$53,395 million. Adjusted earnings for the period came in at
$2.16 per share, up 27.8% from $1.69 earned in fiscal 2012 while
remain in line with the Zacks Consensus Estimate. On a reported
basis, Lowe's earnings per share came in at $2.14.
Other Financial Aspects
Lowe's ended the quarter with cash and cash equivalents of
$391 million, long-term debt (excluding current maturities) of
$10,086 million and shareholders' equity of $11,853 million,
reflecting a debt-to-capitalization ratio of approximately
During the quarter, the company repurchased $958 million worth
of its common stock and distributed $189 million as dividends.
During the fiscal, Lowe's repurchased $3.7 billion worth of its
common stock and distributed $733 million as dividends.
Along with its earnings release, Lowe's announced that its
board of directors has approved a new share repurchase program
worth $5.0 billion. Now, the company has total authorization
worth $6.3 billion including the previous remaining authorization
of $1.3 billion.
Fiscal 2013 Outlook
After concluding fiscal 2013, Lowe's initiated its fiscal 2014
outlook. The company expects its sales and comparable-store sales
to register year-over-year growth of approximately 5% and 4%
respectively. Operating margin is expected to improve by nearly
65 basis points while effective tax rate is projected to be
On the basis of the above assumptions, Lowe's anticipates its
earnings for the fiscal 2014 to be approximately $2.60 per share.
Currently, the Zacks Consensus Estimate for the fiscal stands at
$2.66 per share.
Moreover, the company intends to open 15 home improvement
stores and 5 hardware stores in the fiscal. As of Jan 31, 2014,
the company operated 1,832 stores in the United States, Canada
Other Stocks to Consider
Currently, Lowe's carries a Zacks Rank #3 (Hold). Other
better-performing stocks in the retail industry space include
Deckers Outdoor Corp.
Francesca's Holdings Corp.
Iconix Brand Group, Inc.
). All of these have a Zacks Rank #2 (Buy).
DECKERS OUTDOOR (DECK): Free Stock Analysis
FRANCESCAS HLDG (FRAN): Free Stock Analysis
ICONIX BRAND GP (ICON): Free Stock Analysis
LOWES COS (LOW): Free Stock Analysis Report
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