Home improvement retailer, Lowe’s (NYSE:LOW) slid in pre-market trading after the company’s sales declined by 12.8% year-over-year to $20.5 billion in Q3 but fell short of analysts’ estimates of $20.8 billion.
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The company reported earnings of $3.06 per diluted share in the third quarter as compared to $0.25 per diluted share in the same period last year, surpassing consensus estimates of $3.02 per share. The retailer’s comparable sales declined by 7.4% in the third quarter “due to a decline in DIY discretionary spending.”
Marvin R. Ellison, Lowe’s Chairman, President, and CEO commented, “Given our 75% DIY [do it yourself] mix, the DIY pressure disproportionately impacted our third quarter comp performance. At the same time, our investments in Pro continue to resonate, resulting in positive Pro comps again this quarter.”
Considering the pullback in DIY spending, the company lowered its FY23 outlook and now expects revenues of around $86 billion, down from its prior forecast in the range of $87 billion to $89 billion. Lowe’s anticipates comparable sales to be down by 5% in FY23 from its prior forecast with a decline in the range of 2% to 4%.
In FY23, adjusted diluted earnings are projected to be around $13 per share as compared to the prior estimate in the range of $13.20 to $13.60 per share.
Is Lowe’s a Buy, Sell, or Hold?
Analysts remain cautiously optimistic about LOW stock with a Moderate Buy consensus rating based on 15 Buys and nine Holds. Year-to-date, LOW stock has increased by more than 4%, and the average LOW price target of $238.05 implies an upside potential of 16.4% at current levels.
