Lowe's Q3 Earnings Beat, Comps Decline, FY24 Outlook Revised

Core Insights - Lowe's Companies, Inc. reported third-quarter fiscal 2024 results that exceeded the Zacks Consensus Estimate for both revenue and earnings, despite year-over-year declines in both metrics and continued weak comparable sales performance [1][3]. Financial Performance - Adjusted earnings per share for the quarter were $2.89, surpassing the Zacks Consensus Estimate of $2.82, but down from $3.06 in the same period last year [3]. - Net sales reached $20,170 million, exceeding the Zacks Consensus Estimate of $19,955 million, but reflecting a 1.5% decline year over year [4]. - Comparable sales fell by 1.1%, showing improvement from a 5.1% decline in the previous quarter, with high-single-digit growth in Pro comparable sales [4]. Profitability Metrics - Gross profit decreased by 1.4% year over year to $6,796 million, with a flat gross margin of 33.7% [5]. - Operating income fell by 5.9% to $2,536 million, and the operating margin shrank by 60 basis points to 12.6% [5]. Financial Health - As of the end of the quarter, the company had cash and cash equivalents of $3,271 million, long-term debt of $32,906 million, and a shareholders' deficit of $13,419 million [6]. - For the nine months ended November 1, 2024, Lowe's generated cash flow from operations of $8,714 million and executed a buyback of approximately 2.9 million shares, totaling $758 million [6]. Fiscal 2024 Outlook - Lowe's revised its fiscal 2024 total sales forecast to a range of $83 billion to $83.5 billion, up from the previous estimate of $82.7 billion to $83.2 billion [7]. - Comparable sales are now expected to decline by 3% to 3.5%, an improvement from the prior forecast of a 3.5% to 4% drop [7]. - The adjusted operating margin is projected to be between 12.3% and 12.4%, slightly down from the previous estimate [7]. - The forecast for adjusted earnings per share has been revised to a range of $11.80 to $11.90, up from the prior projection of $11.70 to $11.90 [8]. Stock Performance - Over the past six months, Lowe's shares have increased by 18.6%, compared to the industry's growth of 20.3% [9].