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Tickers in this Article: LOW
On Monday, August 20, 2012, Lowe's Cos (NYSE:LOW) will report its second quarter earnings.

Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: Earnings: Quality Means Everything

What to Expect: Lowe's is expected to report 70 cents per share, up 2.9% from a year ago when the company reported earnings of 68 cents per share.

Whereas the consensus estimate was 74 cents three months ago, it has since fallen. For the fiscal year, analysts are projecting earnings of $1.79 per share.

Revenue for the quarter is expected to be $14.46 billion, short of last year's reported figure of $14.54 billion by 0.6%. Lowe's is expected to report revenue of $50.58 billion for the fiscal year.

Company Performance: LOW has a P/E ratio of 17.5, high compared to the industry average of 14.91. This could mean that the market is expecting big things over the next few months or years. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Investment Valuation Ratios: Price/Earnings Ratio

The stock price has fallen 6.5% to $26.54 from $28.37 since May 17, 2012. Lowe's' stock price is currently in the middle of a rising streak. The stock has risen $1.40 per share since August 1, 2012.

The Competition: Lowe's Companies is a home improvement retailer offering products to homeowners, renters, and commercial business customers. Most analysts (11 of 21) rate Lowe's a buy.

The company's closest competitor in the retail (home improvement) industry is Home Depot (HD). Analysts are less optimistic about Lowe's than about Home Depot. Fourteen out of 23 analysts rate the latter a buy.

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