Lowe's Companies (NYSE:LOW) announced its results for the most recent quarter on August 20, 2012. Lowe's Companies is a home improvement retailer offering products to homeowners, renters, and commercial business customers.

In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Can Earnings Guidance Accurately Predict The Future?

The Numbers: Lowe's Companies posted revenues above analyst predictions, though the company's EPS came up short of expectations. The company reported adjusted net income of 65 cents per share versus the 71 cents per share estimate and revenues of $14.25 billion versus the $12.98 billion estimate. Revenue fell 2% from the same period last year. Slumping revenue in the last quarter ends Lowe's Companies' streak of four consecutive quarters of revenue increases. The company's net income for the quarter was $747 million. This is a 10% decline from last year. With last quarter's falling profit, the company breaks a streak of two consecutive quarters of year-over-year profit increases.

Management Quote: "Our results fell short of our overall expectations," commented Robert A. Niblock, Lowe's chairman, president and CEO. "However, I have confidence in our strategy and in our employees, and while we recognize the significant magnitude of change that we've asked the organization to absorb as we transform our business, we fully understand that we must improve our level of execution."

A Look Back: Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 0.6 percentage point from the year-earlier quarter to 33.9%. In that span, margins have contracted an average of 0.8 percentage point per quarter on a year-over-year basis.

Net income has dropped 5.4% year-over-year on average across the last five quarters. Performance was hurt by a 44.3% decline in the third quarter of the last fiscal year from the year-earlier quarter.

Looking Ahead: Analysts appear increasingly negative about the company's results for the next quarter. The average estimate for the third quarter has moved down from 41 cents a share to 40 cents over the last 60 days. A decreasing earning estimate is a negative sign and usually leads to a drop in the stock price. For the fiscal year, the average estimate has moved down from $1.87 a share to $1.81 over the last 60 days.

Related Articles
  1. Stock Analysis

    8 Solid Utility Stocks for a Bear Market

    If you're seeking modest appreciation, generous dividend payments and resiliency, consider these eight utility stocks.
  2. Stock Analysis

    Why Phillips 66 (PSX) is a Solid Long-Term Bet

    Here's why Phillips 66 will likely remain one of the world’s largest and most profitable companies for a long time to come.
  3. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  4. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  5. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  6. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  7. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  8. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  9. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  10. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!