Since When Is a 11.5% Drop in Profits Good News?

Discussion in 'Stocks' started by ByLoSellHi, Feb 23, 2007.

  1. When you're directly tied to the depressed housing market, and your shareholders desperately want to see a bottom, even though it may not be anywhere near on the horizon - in reality.

    Lowe’s Quarterly Profit Declines 11.5 Percent

    Published: February 23, 2007

    Filed at 10:48 a.m. ET

    CHARLOTTE, N.C. (AP) -- Lowe's Cos., the nation's second biggest home improvement store chain, said Friday that its fourth-quarter profit fell 11.5 percent as the market slowed amid a continued slump in the housing sector. But the results topped expectations and the company's shares rose nearly 5 percent.

    ''With everything we experienced in 2006, I am still greatly pleased,'' said Robert A. Niblock, Lowe's chairman and chief executive on a conference call with analysts.

    The Mooresville, N.C.-based retailer said it earned $613 million, or 40 cents a share, for the three months ended Feb. 2, down from $693 million, or 43 cents a share, a year earlier.

    Revenue fell 3.7 percent to $10.4 billion from $10.8 billion a year earlier.

    Analysts surveyed by Thomson Financial were expecting net income of 37 cents a share on revenue of $10.36 billion. The estimate for earnings typically excludes one-time items.

    Same-store sales, a key measure of industry performance that is based on sales in stores open at least one year, fell 5.3 percent. The company, which opened 58 stores in the quarter, had expected same-store sales decline of 4 percent to 6 percent for the quarter.

    The decline was a result of pressure by a slowing housing market, significant deflation in lumber and plywood prices and tough comparisons to last year when rebuilding efforts were underway after an especially damaging hurricane season, Niblock said.

    On top of the housing market downturn, the fourth quarter is seasonally the weakest for home-improvement retailers as the colder weather typically results in fewer building and renovation projects, he said.

    Still, the results encouraged Wall Street.

    Lowe's shares rose $1.62, or 4.8 percent, to $35.25 in morning trading on the New York Stock Exchange after reaching a 52-week high of $35.74 earlier in the session.

    On Tuesday, bigger rival Home Depot Inc. said its fourth-quarter income dropped 28 percent. Its same-store sales dropped 6.6 percent.

    For the year, Lowe earnings rose 12.3 percent to $3.11 billion, or $1.99 a share, from $2.77 billion, or $1.73 a share, a year earlier. Twelve-month revenue rose 8.6 percent to $46.9 billion from $43.2 billion in the previous year.

    Lowe's expects to earn 49 cents to 51 cents a share for the first quarter and show sales growth of 5 percent to 6 percent. The company anticipates same-store sales decline of 2 percent to 4 percent for the period.

    For fiscal 2007, the company expects to earn $2.02 to $2.09 a share. It plans to open 150 to 160 stores and estimates total sales growing about 10 percent. Same-store sales are projected to be flat up to 2 percent.
  2. S2007S


    you beat me too it, I saw the same thing this morning. Its as if they dont want to believe the housing market is in the middle of a collapse.
  3. Earnings are up 12%, stock is up 7% from a year ago (4.5% of that is from today). And they say that they think they've seen the bottom of their sales trends. Is the price action unreasonable?
  4. It has nothing to do with the actual number, it's numbers vs. forecasts and then guidance.
  5. Agreed. These threads come up all of the time. The decrease was already priced in, what wasn't priced in was the less than expected decrease and/or the guidance.
  6. All I have to say is good luck on that guidance, Lowe's.
  7. what i found the funniest is low's stock price is right at an all time high as earnings have been terrible for a year. that shows the huge mania were in. so lows never discounted 1 year of down earnings as it simply skipped the valley down to the next peak