Yahoo Finance Lowe's Companies, Inc. Just Released Its Full-Year Earnings: Here's What Analysts Think
There's been a notable change in appetite for Lowe's Companies, Inc. (NYSE:LOW) shares in the week since its yearly report, with the stock down 15% to US$108. It was a credible result overall, with revenues of US$72b and statutory earnings per share of US$5.49 both in line with analyst estimates, showing that Lowe's Companies is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Lowe's Companies after the latest results.
Check out our latest analysis for Lowe's Companies
Taking into account the latest results, the latest consensus from Lowe's Companies's 29 analysts is for revenues of US$74.2b in 2021, which would reflect a satisfactory 2.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 19% to US$6.55. Yet prior to the latest earnings, analysts had been forecasting revenues of US$74.4b and earnings per share (EPS) of US$6.72 in 2021. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
The consensus price target held steady at US$133, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Lowe's Companies, with the most bullish analyst valuing it at US$165 and the most bearish at US$99.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
In addition, we can look to Lowe's Companies's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that Lowe's Companies's revenue growth is expected to slow, with forecast 2.9% increase next year well below the historical 5.5%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Lowe's Companies.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Lowe's Companies's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Lowe's Companies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Lowe's Companies going out to 2025, and you can see them free on our platform here..
It might also be worth considering whether Lowe's Companies's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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