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Lowe's Companies, Inc. (LOW - Free Report) is likely to register a decrease in the top line from the year-ago fiscal quarter’s respective readings when it reports second-quarter fiscal 2023 earnings on Aug. 22, before the opening bell. The Zacks Consensus Estimate for quarterly revenues is pegged at $24,936 million, indicating a 9.2% decline from the year-earlier fiscal quarter’s reported figure.

The consensus estimate for earnings has been stable in the past 30 days at $4.49 per share, suggesting a 3.9% dip from the year-ago fiscal quarter’s tally.

In the last reported quarter, LOW delivered an earnings surprise of 5.5%. We note that this home-improvement retailer has a trailing four-quarter earnings surprise of 3.7%, on average.
 

Key Factors to Note

Lowe's quarterly results are likely to have been hurt by a tough operating backdrop, including inflationary pressures and currency headwinds. Additionally, stronger-than-anticipated pullback in home-improvement spending, lumber deflation, and weaker-than-expected DIY discretionary sales are likely to have acted as deterrents. These headwinds, coupled with any deleverage in selling, general & administrative costs, and other expenses, are expected to have hurt the company’s performance in the fiscal second quarter. Lowe’s has been investing in wage increases and bonuses.

On its last earnings call, management had projected a nearly $400 million headwind to sales in the fiscal second quarter owing to the timing shift in the company’s fiscal calendar. Lumber deflation will also pressurize sales by about 150 basis points in the same quarter.

Nonetheless, Lowe’s focus on enhancing the omnichannel retailing capabilities in-store operations, website, and supply chain to resonate well with customers’ demand, appears encouraging. In addition, its pro-business and Total Home strategy have been contributing to the company’s performance. All these strengths are likely to have provided some cushion to LOW’s performance in the quarter to be reported. For the fiscal second quarter, management had earlier anticipated adjusted operating margins to be slightly above the year-ago results, partly due to the effect of the shift in its fiscal calendar and the timing of several productivity initiatives.
 

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Lowe's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
 

Lowe's Companies, Inc. Price and EPS Surprise

Lowe's Companies, Inc. price-eps-surprise | Lowe's Companies, Inc. Quote

Lowe's has an Earnings ESP of -1.14% and a Zacks Rank of 3.

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