Lowe’s Companies, Inc. Beats Earnings Estimates, Trims Guidance

Lowe’s Companies, Inc. (NYSE:LOW) released its latest quarterly earnings report before opening bell this morning, posting earnings of $1.04 per share on $16.6 billion in revenue—a 5.7% increase. Net earnings were $1.04 billion. Analysts had been expecting to see earnings of $1.02 per share and $16.6 billion in revenue. In the same quarter a year ago, Lowe’s reported earnings of 88 cents per share on $15.7 billion in revenue.

Breaking down Lowe’s earnings report

The home improvement retail chain reported a 4.4% increase in comparable sales for the second quarter. For the first six months of the year, sales rose 4.2% to $30 billion, while comparable sales rose 2.8%. Management said they recovered the majority of the missed outdoor product sales in the first quarter because of bad weather. They also said that they expect home improvement spending to progress along with strengthening job market and growth in income.

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During the second quarter, Lowe’s bought back $1.1 billion worth of shares as part of its share buyback program. The company paid out $183 million in dividends. For the first six months of the year, the retail chain bought back a total of $2 billion worth of stock and paid out dividends of $369 million.

Lowe’s cuts guidance

Lowe’s modestly trimmed guidance for the rest of the year due to its year-to-date sales performance and previous assumptions for the second half of the year. However, the company left its guidance for diluted earnings per share the same.

For the full year, Lowe’s now expects a 4.5% increase in total sales and a 3.5% increase in comparable sales. The company plans to open about ten new home improvement stores and five new hardware stores this year. EBITDA as a percentage of sales is expected to rise by about 65 basis points. The company expects an effective income tax rate of about 37.2% and diluted earnings per share of about $2.63 for the fiscal year that ends Jan. 30, 2015.