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Home-improvement chain Lowe’s (NYSE:LOW) is set to report its second-quarter results on Tuesday, before market open, with the magnitude of slowdown in nonessential spending in focus, as Americans deal with sustained inflation and rising interest rates.
Last week larger rival Home Depot (HD) beat consensus estimates with its second-quarter earnings report, but posted a fall in comparable sales as consumers stayed away from big-ticket spending.
Analysts expects consume spending to shift from goods to services, and big-ticket items to take a hit as homeowners downsize large projects due to higher costs of home living.
Wall Street analysts expects the home goods retailer to post earnings per share of $4.48 on revenues of $24.98 billion, which would mark a drop of 9.1% year-over-year.
Seeking Alpha contributor Harrison Schwartz said, “Lowe’s appears likely to face a sales decline over the coming two years due to weakening economic trends; however, there may be significant variation in its store performance across geographies.”
Fellow contributor Waterside Insight noted, “Lowe’s Companies has greatly benefited from the home improvement boom since the pandemic, with the trend increasingly likely to normalize.”
Lowe’s has seen substantial cuts to its estimates over the last three months. Earnings per share forecasts have been revised down 25 times vs. upward 1 revision, while revenue estimates have been revised downwards 19 times, compared to 3 upward moves.
Shares of Lowe’s have risen over 9% YTD, outpacing Home Depot’s near 3% increase. Seeking Alpha analysts at large rate Lowe’s a Buy. This compares to average Wall Street rating of Buy and SA Quant rating of Hold.
