Lowe's Gets Smoked LOW, HD
Sometimes a company is so good at what it does that the slightest disappointment get magnified well out of proportion. Welcome to Lowes (NYSE:LOW).
The big home improvement retailer turned in genuinely strong results for the quarter ending May 5, 2006. Revenue rose 20% to $11.92 billion. Comparable store sales rose almost 6%. Gross margin improved from 34.28% to 34.97%. Pretax earnings rose to $1.368 billion from $953 million in the period a year ago. Guidance is for the next quarter (ending August 4) to show a revenue increase of 12%. But, the quarter will have one fewer week in it than in the comparable period last year. Sales for the fiscal year ending February 2, 2007 should be up 13% with a 52 week year compared to 53 weeks in the year past.
Perhaps the recent panic gathering on Wall Street has now pierced the veil of rationality. Lowe's Companies' stock dropped 4.5% to $59.82 against a $69.70/$56.50 high/low for the last 52-weeks. It must have been lost on the crowd that Lowe's and competitor Home Depot (NYSE:HD) have been growth engines for years.
In the fiscal year (January 30, 2004) three year back, Lowe's revenue was $30.8 billion. In the most recent fiscal year (February 3, 2006) revenue hit $43.2 billion. Big growth off a big base. Operating income grew at an even better pace. During a comparable period, Home Depot revenue grew from $64.8 billion to $81.5 billion. The two competitors do not seem to be doing one another too much harm.
With a forward P/E of 12.7, Lowe's is cheap.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.
The big home improvement retailer turned in genuinely strong results for the quarter ending May 5, 2006. Revenue rose 20% to $11.92 billion. Comparable store sales rose almost 6%. Gross margin improved from 34.28% to 34.97%. Pretax earnings rose to $1.368 billion from $953 million in the period a year ago. Guidance is for the next quarter (ending August 4) to show a revenue increase of 12%. But, the quarter will have one fewer week in it than in the comparable period last year. Sales for the fiscal year ending February 2, 2007 should be up 13% with a 52 week year compared to 53 weeks in the year past.
Perhaps the recent panic gathering on Wall Street has now pierced the veil of rationality. Lowe's Companies' stock dropped 4.5% to $59.82 against a $69.70/$56.50 high/low for the last 52-weeks. It must have been lost on the crowd that Lowe's and competitor Home Depot (NYSE:HD) have been growth engines for years.
In the fiscal year (January 30, 2004) three year back, Lowe's revenue was $30.8 billion. In the most recent fiscal year (February 3, 2006) revenue hit $43.2 billion. Big growth off a big base. Operating income grew at an even better pace. During a comparable period, Home Depot revenue grew from $64.8 billion to $81.5 billion. The two competitors do not seem to be doing one another too much harm.
With a forward P/E of 12.7, Lowe's is cheap.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.
posted by douglas mcintyre at 6:26 PM
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