Lowe's To Report Q2 Earnings: What To Expect?

Lowe's Companies Inc. (LOW - Analyst Report) is slated to report second-quarter fiscal 2015 results on Aug 19, before the market opens. The big question facing investors now is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported.

In the preceding quarter, the company had posted a negative earnings surprise of 5.4%. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Lowe's is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Lowe's Earnings ESP is -1.61% as the Most Accurate estimate stands at $1.22, whereas the Zacks Consensus Estimate is pegged at $1.24. In addition, Lowe’s carry a Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing this Quarter

Analysts observe that traffic was softer-than-expected in the beginning of the quarter likely due to weather related disturbances, which along with forex headwinds might weigh upon Lowe’s second quarter performance. However, an increase in remodelling spending, along with the company’s extensive merchandising initiatives, is likely to provide respite.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

American Eagle Outfitters, Inc. (AEO - Analyst Report) has an Earnings ESP of +7.14% and a Zacks Rank #1(Strong Buy).

Foot Locker, Inc. (FL - Snapshot Report) has an Earnings ESP of +1.45% and a Zacks Rank #2 (Buy).

Campbell Soup Company (CPB -Analyst Report) has an Earnings ESP of +4.76% and a Zacks Rank #2.