Lowe’s 2022 Guidance Misses Estimates; Shares Up 2%

American home improvement retailer Lowe’s Companies, Inc. (LOW) initiated fiscal 2022 guidance and reiterated its fiscal 2021 outlook. The company also announced a new share buyback program.

However, the forecast fell short of estimates and pushed the shares down 1.3% momentarily on the news, ending the day up 2% at $257.54 on December 15.

FY2021 Guidance and FY2022 Outlook

Lowe’s reiterated its full-year fiscal 2021 total sales forecast of $95 billion, which represents 33% comparable sales growth on a two-year stack basis. Moreover, the company provided a Return on Invested Capital (ROIC) guidance of over 33%.

Additionally, for the full year fiscal 2022, the company initiated a total sales forecast to fall between $94 billion to $97 billion, against the consensus estimate of $97.6 million. FY22 comparable sales are expected to grow from flat to 3%.

Meanwhile, diluted earnings for FY22 are expected to be between $12.25 per share and $13 per share, while the consensus estimate is pegged at $12.93 per share.

Rewarding Shareholders

Based on the company’s continued growth trajectory and cash flow generation capabilities, the company’s Board authorized a new $13 billion share buyback program.

The new repurchase program has no expiration date and adds to the previous program’s balance, which was $7.3 billion as of December 14, 2021.  The company now has a total share repurchase authorization of approximately $20 billion.

Management Comments

Chairman, President, and CEO of Lowe’s, Marvin R. Ellison, said, “We are confident in the long-term growth prospects for the Home Improvement market, and that we are making the right investments to continue winning with both our Pro and DIY customers.  We also remain committed to driving sustainable shareholder value creation through a disciplined and highly effective capital allocation strategy.”

Analysts’ View

Lowe’s remains one of the best pics for Top Analysts. Wells Fargo analyst Zachary Fadem issued a Buy rating with a $295 price target on the stock, which implies 14.6% upside potential to current levels.

Responding to the news, Fadem said, “Despite providing FY22 sales/EPS guidance -3%/-5% below our model, we view the LOW FY22 update with a bullish lens, as 1) the FY22 bar appears achievable/beatable and 2) margin expansion likely continues, with or without the benefit of top-line growth… All in, LOW remains a top FY22 pick, as long-term category tailwinds present Offense/Defense, margins are structurally improving, and we see upside to EPS estimates and valuation.”

Overall, the stock commands a Strong Buy consensus rating based on 12 Buys and 4 Holds. The average Lowe’s price target of $277.38 implies 7.7% upside potential to current levels. Shares have gained 57.8% over the past year.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings, the world’s biggest website usage monitoring service, offers insight into LOW’s performance.

In November, Lowe’s website traffic recorded a 5.27% year-over-year decline in monthly visits. However, year-to-date website traffic growth increased by 14.52% compared to the same period last year.

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