Oppenheimer's Prediction For Lowe's Comes True, Analyst Says Sales Mix Shift Affected Earnings

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Oppenheimer senior equity research analyst, Brian Nagel, predicted on Tuesday that quarterly earnings from "Lowe's Will Be Good, But Not As Good As Home Depot". His prediction came true on Wednesday with Lowe's Companies, Inc. LOW reporting EPS of $1.20 on revenue of $17.35 billion, compared to analysts' expectation of EPS of $1.24 on revenue of $17.27 billion.


Nagel was on CNBC post Lowe's earnings report to weigh in on the company's numbers.


Sales Mix Shift


"It's a bit mixed...the sales were decent, good," Nagel said. "But our earnings did miss...I suspect that there was probably a sales mix shift. They called out [selling] lot of bigger ticket items, those are typically at lower margins. That probably hurt their revenue, but hurt their profitability a bit."


4.3 Percent Comp


On whether the company's same store sales number were bad, Nagel said, "Not at all...Investors always look at Lowe's versus Home Depot, it's just how we do it and Home Depot put a 5.7% comp up yesterday. Here today Lowe's was at 4.3, that [spread] is about in-line wth expectations. But a 4.3 percent comp is actually quite good."


Don't Compare With Home Depot And Results Look Good


Nagel was asked if there's anything that concerns him regarding Lowe's. He replied, "I don't know if I am too terribly concerned. I think, as the market digests these results the market is going to come away to [the] opinion look this is a pretty good quarter. We see time and again [therfore] a number of reasons. Lowe's doesn't operate quite as well as Home Depot, but look if we won't comparing these results to Home Depot's yesterday, they will look really good."

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Posted In: CNBCMediaConsumer DiscretionaryHome Improvement Retail
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