Shares of home improvement and retail company Lowe’s Cos. is now reporting a decline recorded to be their lowest in the past three months. The drop in Lowe’s shares was led by a weak third quarter earnings report that missed investor and analyst expectations. Although there was a 9.6% growth in their net sales, this led them to miss analysts expectations. The missed earnings report and its effect on the shares of the company showed investor concern on the demand for home improvement products and other building materials that the company provides.
Lowe’s third-quarter earnings report showed earnings of 43 cents per share amounting to $379 million compared to last year’s $736 million with earnings of 80 cents per share. Zacks Investment Research initially posted that they expected Lowe’s to report 96 cents earnings per share.
This shows that the company failed to beat an expected earnings per share of 96 cents which is a twenty percent rise compared to Lowe’s EPS last year at the same quarter of 80 cents per share while their revenue was expected to rise up by 10% in an amount around $15 billion leading their reported numbers to be short of analyst expectations.
From what was originally earnings of 88 cents per share, Lowe’s posted low numbers led by charges regarding their Hydrox joint venture which amounted to up to $462 million worth of charges and eventually caused the company canceled projects.
After the release of Lowe’s third quarter earnings report, shares dropped to as much as 5.5% as early as pre-market trading. This is currently the company’s worst drop in the past three months after the company downgraded its forecast for the whole year. The RSI Indicator then pointed down sharply hinting a potential oversold stock but not anytime soon.
This raised a growing concern among investors that the company might be facing an issue regarding the lack of demand for their products and that Americans most especially are spending less on the development of or the repair of their homes.
The latter, then became an issue after one of Lowe’s bigger rivals Home Depot issued a guidance in an increase in their annual forecast and reported transactions higher than $900 and a rise in their same-store sales growth by 5.9% for the same quarter. This is compared to Lowe’s big ticket purchases only amounting to $500 above despite the sale of their outdoor products and appliances boosting the said transactions by 4.3%.
Lowe’s Chief Executive Office Robert Niblock stated that amongst the problems faced by the company was the weather including the extreme heat and the lack of big ticket purchases which are transactions from huge or professional customers.
By late afternoon trading, Lowe’s shares were down by 3.7% before closing lower at around 2.94% at $67.02 on the recent trading session’s close of $69.05 and a day’s high of $69.85.