Lowe’s Companies, Inc. (LOW) is a FORTUNE 50 home improvement company serving more than 17 million customers a week in the United States, Canada and Mexico. With fiscal year 2015 sales of $59.1 billion, Lowe’s has more than 2,355 home improvement and hardware stores and 285,000 employees. Founded in 1946 and based in Mooresville, N.C., Lowe’s supports the communities it serves through programs that focus on K-12 public education and community improvement projects.
The chain has 1,840 stores in the United States, Canada, and Mexico. Expansion into Canada began in 2007 with the opening of a store in Hamilton, Ontario in early 2008. Lowe’s started the construction of two stores in the Mexican city of Monterrey officially entering the Mexican market in early 2010,
Lowe´s shares decreased a 0.90% dropping to an $80 price, in spite of having a high expectations at a $93 price target.
The company possesses a “strong balance sheet, and with a disciplined capital allocation plan including dividends and share buybacks, we believe the company will continue to benefit from a propensity for homeowners to continue to invest in their most valuable tangible asset – the home,” Analysts suggest.
Aside from this, the company recently acquired Canadian home improvement chain Rona, with a boost of shareholder value and benefiting efficiently from the $2.3 billion deal. Looking ahead, it looks like the housing backdrop will be positive in 2016 to 2018, another upside for Lowe’s.
The first quarter results include an unrealized gain on a foreign currency hedge entered into in advance of the Company’s pending RONA acquisition, which increased pre tax earnings for the first quarter by $160 million and diluted earnings per share by $0.11.
Sales for the first quarter increased 7.8 percent to $15.2 billion from $14.1 billion in the first quarter of 2015, and comparable sales for the quarter increased 7.3 percent. Comparable sales for the U.S. home improvement business increased 7.5 percent.
Lowe’s strengths can be seen in several areas, such as its growth in earnings per share, increase in net income, revenue growth, and good cash flow from operations and solid stock price performance. They feel that their strengths outweigh the fact that the company has had generally high debt management risk by most measures that they evaluated.
“We executed well in the quarter, growing both transaction and average ticket to achieve comparable sales growth that exceeded our expectations,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “We continued to focus on providing better channelization customer experiences, and saw strength in indoor as well as outdoor categories.
“Our team’s project expertise and commitment to customer service allowed us to capitalize on strong home improvement demand during the quarter, and I would like to thank them for their efforts,” Niblock added.
Delivering on its commitment to return excess cash to shareholders, the Company repurchased $1.2 billion of stock under its share repurchase program and paid $255 million in dividends in the first quarter.