Promising Earnings Report by Lowe’s (NYSE:LOW) as Home Depot (NYSE:HD) Faces Breach

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By Thomas Copeland on November 19, 2014 Company

Lowe’s Companies Inc. (NYSE:LOW) has reported its results for the quarter on Wednesday before markets were opened. Diluted earnings per share of $0.59 and revenues of $13.68 billion have been posted by the home improvement chain. As per Thomson Reuters consensus, the third quarter result was quite close to the estimated earnings per share of $0.58 and revenues of $13.55 billion. While comparing last year’s result, earnings per share of $0.47 and revenues of $13.0 billion were reported by the retailer for the same quarter.

As per Lowe’s (NYSE:LOW) expectation the yearly sales would increase by 4.5 percent to 5 percent progressively over the same period and the same-store sales are bound to rise 3.5 percent to 4 percent. Diluted earnings per share of about $2.68 has been predicted, whereas, earnings per share projected by consensus analysts is $2.68 with $55.78 billion in revenues. However at present the home improvement retailer is hopeful of generating almost $55.82 billion in revenues, which is encouraging for the investors. Lowe’s CEO was highly pleased with their performance and indicated to maintain optimism regarding the home improvement landscape vigilantly.

Under the share buyback program, $900 million worth of shares have been repurchased by the retailer and $229 million have been paid as dividends in the third quarter. Whereas, total of $2.9 billion of shares have been repurchased by Lowe under its share buyback program in the first nine months and dividends payout stood at $597 million.

Lowe’s (NYSE:LOW) price target has been increased from $60 to $70 by Oppenheimer thus indicating a rise of about 20% from present levels. Besides this the firm’s forecast for the fiscal year 2106 indicates Lowe’s EPS of $3.70 against Wall Street estimates of $3.62. In addition, Oppenheimer has pointed out that against the conventional market perception, shares of Lowe’s and the other home improvement retailer Home Depot (NYSE:HD) are not only expected to perform good but would likely to overtake S&P 500 estimates during initial and mid stages of Fed tightening cycles

Home Depot (NYSE:HD) on this Tuesday reported its results for the third quarter and its EPS estimates include costs of about $34 million associated with breach of data, since details of almost 56 million debit and credit cards were stolen by hackers in April this year. In addition, almost 53 million email accounts of its customers have also been hacked during this cyber attack. Home Depot is facing at least 44 civil lawsuits associated with the breach and its shares showed a slight decline in the pre-market trading, dropping by 0.4 percent to $97.66. Home Depot is not been able to estimate the final cost for the breach but it is definitely going to affect company’s results for the last quarter of the year and might spill over on the subsequent quarters.

In the premarket trading on Wednesday, Lowe’s (NYSE:LOW) shares rose by about 4.1 percent to $60.95 above its estimated high of $59.16. Thomson Reuters had predicted share price of around $58 before the announcement of results.