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Home improvement retailer Lowe’s is expected to report its fiscal first-quarter results on May 21, with little to no movement expected in its stock as revenue and earnings are anticipated to meet market expectations. The company faced challenges in 2023 due to a decrease in spending from the do-it-yourself customer segment, impacted by factors such as weather, inflation, and high interest rates affecting the housing market. For the full year 2024, Lowe’s projects total sales of $84 billion to $85 billion, with comparable sales expected to decline by 2% to 3% and an adjusted operating margin in the range of 12.6% to 13.7%. Diluted earnings per share are forecasted to be between $12.00 to $12.30 for FY 2024.

Despite a strong gain of 45% in its stock price from early 2021 to the present, Lowe’s performance has been inconsistent, with varying returns of 61% in 2021, -23% in 2022, and 12% in 2023. This contrasts with the S&P 500, which had returns of 27% in 2021, -19% in 2022, and 24% in 2023. As individual stocks struggle to consistently outperform the market, a portfolio approach like the Trefis High Quality Portfolio has been more successful, offering better returns with less risk. The current uncertain economic environment, including high oil prices and elevated interest rates, raises questions about Lowe’s future performance and whether it will be able to outperform the market.

Trefis estimates Lowe’s Q1 2024 revenues to be around $21.2 billion, in line with consensus estimates. The company’s revenues fell by 17% year-over-year in Q4, with comparable sales declining by 6.2%. Pro customer comparable sales were flat for the quarter, while gross margin improved to 32.4% and operating margin rose to 9.7% compared to the previous year. Despite a 12.4% decrease in sales in fiscal 2023 compared to 2022, Lowe’s revenue is forecasted to be around $85 billion for fiscal 2024, seeing a 2% year-over-year decline.

For Lowe’s EPS in Q1 2024, Trefis predicts $2.94 per share, aligning with consensus estimates. In Q4, the company generated net earnings of $1.02 billion, or $1.77 per share – an increase from $957 million, or $1.58 per share in the prior-year quarter. With an EPS estimate of $12.20 and a P/E multiple of 19.7x for fiscal 2024, Lowe’s valuation suggests a price of $240 per share, close to the current market price. This analysis provides insights into Lowe’s financial performance and future prospects in the home improvement industry.

Overall, Lowe’s is facing challenges in the current economic environment, with uncertainty surrounding consumer spending, housing market conditions, and interest rates. Despite fluctuations in its stock performance, the company continues to focus on improving its operational efficiency and delivering value to its customers. As Lowe’s prepares to announce its fiscal first-quarter results, investors will be closely watching for any updates on sales, earnings, and future guidance. With a strategic approach to navigating market volatility, Lowe’s aims to maintain its position in the home improvement sector and drive long-term growth for its shareholders.

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