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Lowe’s Companies will report third-quarter results before the bell on Tuesday, with analysts expecting sales to decline year over year.
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Lowe’s and rival Home Depot have reported declining sales in recent quarters as discretionary spending has declined.
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Analysts said sales in the professional contractor market will be a key area to watch as DIY sales remain under pressure from inflation.
Lowe’s Cos. (LOW) will report third-quarter results Tuesday morning, with analysts expecting lower sales than the same time last year, despite a potential sales boost due to recent hurricanes.
Analysts are slightly less optimistic about Lowe’s stock than their rival Home Depot (HD), which reported profits last week. Of the 19 analysts covering Lowe’s, tracked by Visible Alpha, 10 have a “buy” rating, eight have a “hold” rating and one has a “sell” rating. Their average price target of $269.32 is within a few cents of Friday’s closing price.
Lowe’s stock is down about 6% from the record high of $287.01 it hit last month, but is also up about 21% this year.
Analysts expect Lowe’s to report sales of $19.89 billion, up from $20.47 billion last year. Net income is expected to decline nearly 10% to $1.60 billion, or $2.82 per share.
Analysts from Bank of America and Melius Research wrote in recent notes that Home Depot’s earnings likely indicate Lowe’s will see a similar sales increase due to the hurricanes that hit southern states during the quarter.
Melius analysts raised their price target on Lowe’s to $310 and said the performance of the professional contractor market — where both Home Depot and Lowe’s have been working to expand their market share — will be a “key question” as the “large Spending and DIY projects are likely to remain lower this quarter.
Home Depot and Lowe’s have reported lower sales in recent quarters as U.S. consumers have focused on buying essential items and cut back on discretionary spending like home improvement projects and “big” purchases like appliances.
