Lowe’s Companies Inc. share price down, posts upbeat Q2 earnings, lowers growth guidance

Lowes, the worlds second-top home improvement retailer, posted its earnings report for the second quarter ended August 1 today, revealing robust sales growth. Despite the upbeat operational results, however, the company lowered its full-year sales growth projection, pressuring shares some 3% down in premarket trade.

The Mooresville, North Carolina-based company reported $16.59 billion in revenue, up 5.6% on an annual basis. Net income rose 10.5% to $1.04bn, while diluted earnings per share added 18.2% to $1.04. The bigger growth for per-share earnings is due to a $1.1bn share buyback, which reduced the volume of shares, bumping up their value, though hurting overall net income.

“We believe home improvement spending will continue to progress in tandem with strengthening job and income growth,” Chief Executive Robert Niblock said in a statement. “We were able to recover most of the outdoor product sales missed in the first quarter due to unfavorable weather conditions.”

Same-store sales, which is a vital gauge as it eliminates revenue from stores less than a year old in an annual comparison, increased 4.4%.

Despite the largely upbeat data, however, Lowe cut its sales growth projection by 0.5% to 4.5%, though maintaining full-year profit forecast at $2.63 per share.

“Our year-to-date sales performance, together with our previous assumptions for the second half of 2014, result in a modest reduction to our sales outlook for the year,” CEO Niblock said.

Lowes report comes a day after Home Depot, Lowes bigger rival, posted its Q2 results with encouraging earnings and and upgrade in profit guidance.

Lowes Companies Inc shares closed Tuesdays session at $51.52 per share, up 16.88% on an annual basis and valuing the company at $51.38bn. Premarket trade today, however, pushed the stock down 3.24% to $49.85 by 11:34 GMT.

According to the Financial Times, 22 analysts offering 12 month price targets for Lowes Companies, Inc. have a median target of $53.00, with a high estimate of $59.00 and a low estimate of $37.00. The median estimate represents a 2.87% increase from the last price of $51.52.