Lowe's Lowdown? Analyst Sees Weaker Sales Than Consensus, Cites Weather Woes

JPMorgan analyst Christopher Horvers lowered estimates for Lowe’s Companies Inc. LOW ahead of the company’s first-quarter earnings release on May 21.

The analyst says that based on the industry analysis and data insights, he is cutting first-quarter comparable sales estimates to -2.7%, below the Street’s consensus of -1.7% and the broader buyside expectations (a decline of 2% to 3.5%).

Horvers writes that Lowe’s experienced a more significant headwind from unfavorable DIY weather conditions earlier in the quarter and has underperformed Home Depot more recently, even as weather conditions improved.

Also Read: Weather Hits Lowe’s Harder Than Home Depot As Spring Traffic Heats Up: Analyst

The analyst notes that Lowe’s previously guided to a -2% comp for the first quarter and roughly flat comps for the first half, anticipating a ~$400 million shift of spring sales into the second quarter.

While Lowe’s faces easier weather comparisons in the second quarter (lapping “one of the worst weather backdrops in 30 years”), the analyst is slightly lowering second quarter comp estimates to +2% (from +3% previously).

This adjustment reflects the first quarter’s underperformance relative to management’s expectations, the uncertain weather outlook, and some underlying softness in the business, the analyst adds.

Further, the analyst estimates first quarter EPS at $2.87, compared to the Street’s $2.91.

Given the expectation that Lowe’s will miss its first quarter outlook and considering its positioning relative to Home Depot on tariffs, the analyst anticipates Lowe’s to adjust its full-year guidance towards the lower end of flat comparable sales and around a 12.3% operating margin.

The analyst expects the company will reiterate confidence in managing tariffs and safeguarding margins in a less favorable scenario.

LOW Price Action: Lowe’s shares are down 0.94% at $223.07 at publication on Tuesday.

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