{"id":9738,"date":"2023-05-17T01:35:11","date_gmt":"2023-05-17T05:35:11","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/why-lowes-stock-fell-on-homes-earnings\/"},"modified":"2023-05-17T01:35:12","modified_gmt":"2023-05-17T05:35:12","slug":"why-lowes-stock-fell-on-homes-earnings","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=9738","title":{"rendered":"Why Lowe’s Stock Fell on Home’s Earnings"},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

\n Home Depot\u2019s<\/span>
\n downbeat forecast sent a chill through the home improvement sector and the wider market when it reported earnings Tuesday. That pushed down
\n Lowe\u2019s
\n stock, and likely will further drive down expectations for the rival retailer\u2019s coming results. <\/p>\n

Home Depot cut both its top- and bottom-line guidance for the full fiscal year. It now sees sales falling 2% to 5% from 2022, compared with its previous forecast of flat year-over-year revenue. It also expects earnings per share to fall 7% to 13% on an annual basis; it had previously guided for a decline in the mid-single digits.<\/p>\n

\n

Lowe\u2019s stock was down 1.5% in recent trading Tuesday, while Home Depot fell 1.6%.<\/p>\n

Analysts have already been bringing down their earnings per share and revenue estimates for Lowe\u2019s (ticker: LOW), which stand at $3.45 a share and $21.68 billion, respectively. However, Home Depot\u2019s (HD) quarterly results will likely lead to further estimate revisions before Lowe\u2019s reports earnings on May 23. <\/p>\n

That\u2019s because worrisome data in Home Depot\u2019s report reflect mounting headwinds for the industry. Oppenheimer analyst Rupesh Parikh writes that Home Depot\u2019s results were \u201cweaker than our expectations of a \u2018so-so\u2019 first quarter\u2026[and] bodes poorly for trends\u201d at Lowe\u2019s.<\/p>\n

Even stripping out the impact of bad weather and tumbling lumber prices, Home Depot said on its conference call that its quarter was mixed\u2014driven by what appears to be tapped out consumers pulling back their home improvement budgets.<\/p>\n

Home Depot shoppers shied away from big-ticket discretionary items as overall same-store sales fell harder than expectations. Professional customers\u2019 backlogs remain elevated from a historical level, but nonetheless fell from the previous year. Pros have also skewed away from bigger remodeling jobs to smaller projects. In addition, even shoplifting appeared to be on the rise, as has been the case at other retailers: Home Depot cited \u201cshrink\u201d\u2014an industry term that includes theft\u2014as the main driver of lower gross margins.<\/p>\n

By and large investors were already braced for bad news, given factors spanning a weak housing market to inflation. But Home Depot\u2019s results confirmed many of those fears about home improvement trends. Lowe\u2019s will likely be affected by many of the same factors hurting Home Depot and other smaller rivals\u2014such as a late spring and falling lumber prices. <\/p>\n

In other words, Home Depot\u2019s expectation for \u201c2023 to be a year of moderation in the home improvement market\u201d might apply to peers as well.<\/p>\n

That said, it isn\u2019t an apples-to-apples comparison, and some company-specific factors could help Lowe\u2019s. Analysts at M Science note that Home Depot \u201cseemed to have lost some share this quarter to Lowe\u2019s.\u201d<\/p>\n

Lowe\u2019s greater exposure to DIY customers, who typically take on smaller projects, could also shield it from some of the drop-off in pricier large-scale renovations. In addition, Jefferies\u2019 analyst Jonathan Matuszewski notes that Lowe\u2019s smaller exposure to the Western U.S. leads him to \u201canticipate less of a headwind from unfavorable weather on comparable sales.\u201d<\/p>\n

Lower expectations might help, too, giving Lowe\u2019s a lower bar to clear.<\/p>\n

Nonetheless, the stock is unlikely to get much of a break if Lowe\u2019s also confirms wobbly consumer demand and ongoing uncertainty in the quarter\u2014and beyond, with its own outlook.<\/p>\n

Write to Teresa Rivas at teresa.rivas@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Home Depot\u2019s downbeat forecast sent a chill through the home improvement sector and the wider market when it reported earnings Tuesday. That pushed down Lowe\u2019s stock, and likely will further drive down expectations for the rival retailer\u2019s coming results. Home Depot cut both its top- and bottom-line guidance for the full fiscal year. It now […]<\/p>\n","protected":false},"author":1,"featured_media":9739,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-9738","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nWhy Lowe's Stock Fell on Home's Earnings | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Home Depot\u2019s downbeat forecast sent a chill through the home improvement sector and the wider market when it reported earnings Tuesday. 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