Lowe's Earnings: A 'Confluence' Of Tailwinds Could Drive Substantial Growth

Lowe's Companies, Inc. LOW is scheduled to report its first quarter financial results before the market opens on Wednesday and, according to Estimize, the company is expected to deliver more than 27 percent year-over-year earnings growth.

The Street is modeling consensus earnings of $0.74 per share on revenue of $14.227 billion, while the crowd projects earnings of $0.75 per share on revenue of $14.293 billion.

Like many other retailers’, Lowe’s’ earnings respond to a sort of cyclical pattern: they peak in the second quarter, fall in the third and fourth, and start to recuperate in the first quarter, before peaking again in the second one. Being this the second quarter, analysts expect higher earnings than in the last two quarters. They also anticipate earnings well above the $0.58 per share reported in the same quarter of last year.

The second chart here illustrates the evolution of sentiment over time. While the Street’s consensus remained pretty much flat since the beginning of the year, the crowd has become increasingly bullish as earnings got closer.

A ‘Confluence’ Of Tailwinds

In a recent report, analysts at Piper Jaffray upgraded shares of Lowe's from Neutral to Overweight, while raising their price target from $79 to $88. The promotion is based on a "confluence" of favorable sales tailwinds.

Related Link: Piper Jaffray Is Upgrading Lowe's, Says Too Many Tailwinds To Ignore

A recent Benzinga article (linked above) concludes, “the various positive tailwinds should drive comp growth of +5 percent for the next two years. As such, the analyst raised his 2015 earnings per share estimate to $3.41 (from $3.29) while raising his 2016 earnings per share estimate to $4.18 (from $3.95).”