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NEW YORK — No. 2 home-improvement chain Lowe's Cos. reports its second-quarter earnings on Monday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Home-improvement retailers have felt the pinch as consumers cut back on big-ticket remodeling projects amid the recession. But there are signs the U.S. housing market is stabilizing after prices plunged for nearly three years, and that should benefit home-improvement retailers.
Spring and summer sales are expected to be "less bad," showing consumers spending more on their lawns and gardens than last year. However, the weather was poor for most of the spring and early summer in many parts of the country, which could have dampened sales.
Both Mooresville, N.C.-based Lowe's and its chief rival, Atlanta-based Home Depot Inc., expect their sales in stores open at least one year, known as same-store sales, to decline during the quarter.
BY THE NUMBERS: Lowe's Cos. expects to earn 51 cents to 55 cents per share. And it foresees revenue between 2 percent below and 1 percent above the same period a year ago, implying sales of $14.21 billion to $14.65 billion.
Analysts polled by Thomson Reuters, on average, predict a profit of 54 cents per share on revenue of $14.35 billion. In the same period a year earlier, Lowe's earned 64 cents per share on revenue of $14.5 billion.
ANALYST TAKE: Jefferies & Co. analyst Daniel Binder raised his price target Thursday on Lowe's Cos. to $26 from $23. He rates Lowe's "buy."
"We believe June sales trends lagged May as bad weather hit the Northern part of the country and then may have rebounded in July as conditions improved," he wrote. "Macro data is pointing to improvements in housing turnover, inventory and pricing, which is the primary reason we are raising our price target rather than lowering our rating as we hit old price targets."
Also on Thursday, Stifel Nicolaus & Co. analyst David A. Schick said sales likely improved over the quarter.
"Our checks suggest the quarter ended better than it started with Home Depot and Lowe's seeing some top-line recovery to close out the quarter," he wrote. He too rates Lowe's "buy."
WHATS AHEAD: Analysts will be looking for any indication of how Lowe's will fare once the housing slump moderates.
STOCK PERFORMANCE: Lowe's shares rose 8 percent during the quarter, which ended Aug. 1. The stock closed at $23.31 on Thursday. It has traded between $13 and $28.49 over the past year.
