Lowe's Q1 Earnings Preview: Can LOW Beat the Odds in a Tough Market?

As Lowe's Companies, Inc. LOW prepares to unveil its first-quarter fiscal 2025 earnings on May 21, before the opening bell, investors are eager to see if the company can beat market expectations. 

The Zacks Consensus Estimate for the to-be-reported quarter’s revenues is pegged at $20.95 billion, which suggests a drop of 2% from the prior year’s levels. The consensus mark for quarterly earnings has been stable over the past 30 days at $2.89 per share, which indicates a decline of 5.6% from the year-ago quarter’s reported figure.

LOW has a trailing four-quarter earnings surprise of 3.9%, on average. In the last reported quarter, this Mooresville, NC-based company’s bottom line outperformed the Zacks Consensus Estimate by a margin of 5.5%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Key Factors to Observe for LOW's Q1 Earnings

A primary area of concern for Lowe’s remains the Do-It-Yourself (DIY) home improvement segment. Discretionary spending in this category continues to be soft, particularly for big-ticket interior projects, as consumers navigate an uncertain economic backdrop. Elevated interest rates and lingering inflation have pressured household budgets, prompting a more cautious approach to non-essential home upgrades. We expect a year-over-year decrease in comparable sales of 2% in the first quarter.

Another challenge for Lowe’s is the overall housing market environment, which remains subdued. High mortgage rates and affordability issues have dampened home sales and turnover activity, suppressing demand for renovation and maintenance services. This is particularly noticeable among new homeowners, who traditionally drive significant demand for upgrades and repairs shortly after purchasing a home.

Despite these headwinds, Lowe’s has been proactive in responding to evolving consumer behaviors and market dynamics. The Pro segment remains a significant growth driver for Lowe’s as the company continues to execute its multi-year strategy to improve product offerings, fulfillment options and the overall shopping experience for professional customers. Furthermore, strategic investments in the Total Home strategy, including modernizing the supply chain and IT infrastructure and enhancing merchandising assortments, position the company to navigate the challenges.

Lowe’s continued focus on omnichannel improvements, productivity enhancements and the expansion of same-day delivery through third-party partners is also helping improve cost control while broadening its customer reach. The relaunch of the MyLowe’s Pro Rewards program, which targets small to medium-sized professionals, further strengthens customer loyalty and encourages repeat business. Moreover, leveraging advanced technologies like AI-driven demand planning and augmented reality tools is enabling Lowe’s to better align its inventory and services with customer needs.

Lowe's Companies, Inc. Price, Consensus and EPS Surprise

Lowe's Companies, Inc. price-consensus-eps-surprise-chart | Lowe's Companies, Inc. Quote

What the Zacks Model Says About LOW

As investors prepare for Lowe’s first-quarter announcement, the question looms regarding earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Lowe’s this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe’s has a Zacks Rank #3 but an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three more companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Dollar General Corporation DG currently has an Earnings ESP of +3.67% and a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings per share is pegged at $1.48, implying a 10.3% year-over-year decline. 

Dollar General’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $10.28 billion, which indicates an increase of 3.7% from the figure reported in the prior-year quarter. DG has a trailing four-quarter earnings surprise of 1.2%, on average.

Five Below FIVE has an Earnings ESP of +4.18% and currently carries a Zacks Rank of 3. FIVE’s top line is anticipated to advance year over year when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $961.1 million, which suggests an 18.4% rise from the figure reported in the year-ago quarter. 

The company is expected to register an increase in the bottom line. The consensus estimate for Five Below’s first-quarter earnings is pegged at 80 cents a share, up 33.3% from the year-ago quarter. FIVE has a trailing four-quarter earnings surprise of 40.6%, on average.

Burlington Stores BURL has an Earnings ESP of +1.78% and currently carries a Zacks Rank of 3. BURL’s top line is anticipated to advance year over year when it reports first-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.52 billion, which suggests a 6.9% rise from the figure reported in the year-ago quarter. 

The company is expected to register a decline in the bottom line. The consensus estimate for Five Below’s first-quarter earnings is pegged at $1.40 per share, down 1.4% from the year-ago quarter. BURL has a trailing four-quarter earnings surprise of 17.9%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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