Lowe’s shares retreat the most in a week on Wednesday, as second-quarter earnings fall short of expectations

Lowe’s Companies Incs (LOW) second-quarter results, reported on August 23rd, fell short of market expectations, while pressuring its shares during yesterdays trade. Lowes also revised down its full-year earnings forecast.

Shares of Lowe’s Companies Inc closed lower for the first time in the past three trading sessions on Wednesday. It has also been the steepest daily loss since August 15th. The stock went down 3.71% ($2.81) to $73.01, after touching an intraday low at $70.76, or a price level not seen since January 11th ($70.56). In the week ended on August 20th the shares of the home improvement chain lost 4.69% of their market value compared to a week ago, which marked a second consecutive period of decline and also the worst performance since the week ended on October 30th 2016. The stock has extended its loss to 5.67% so far during the current month, following a 0.17% dip in July. The latter has been a third straight month of losses. For the entire past year, the shares of Lowe’s Companies Inc retreated 6.47%.

Total sales rose 6.8% to $19.5 billion during the second quarter ended on August 4th from $18.3 billion during the same period of 2016. In comparison, analysts on average had anticipated $19.53 billion in total revenue.

On the other hand, Lowes comparable sales were reported to have increased 4.5% year-on-year during the latest quarter, which exceeded the median analyst estimate (a 4.3% growth).

“We are pleased with our improved comparable sales performance relative to last quarter, and the strong momentum we built throughout the second quarter culminating in a 7.9% comparable sales increase for the month of July”, Robert Niblock, Lowes chairman, president and Chief Executive, was quoted as saying in a press release.

“While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience and drive sales. This includes amplifying our consumer messaging and incremental customer-facing hours in our stores which will put pressure on our operating margin. We believe this is the right strategy to more fully capitalize on strong traffic trends in what we believe is a supportive macroeconomic backdrop for home improvement”.

Meanwhile, the companys net earnings were reported to have increased to $1.4 billion ($1.68 per share) during the quarter ended on August 4th from $1.2 billion ($1.31 per share) during the same three-month period a year earlier. The result included a $96 million gain generated from the sale of Lowes interest in its Australian joint venture.

At the same time, the companys adjusted earnings were reported at $1.57 per share during the second quarter, up from $1.37 per share during the same period of 2016. However, the figure fell short of market consensus ($1.62 per share).

Total sales for the full fiscal year 2017 are now projected to expand 5%, while comparable sales – by 3.5%.

Operating income as a percentage of sales for the fiscal year ending on February 2nd 2018 is now projected to increase 80 to 100 basis points. In comparison, a prior forecast had pointed to an increase of 20 basis points in operating margin.

The company also revised down its fiscal year 2017 earnings forecast and now expects to earn between $4.20 and $4.30 per share. In comparison, the median forecast by analysts had pointed to full-year earnings of $4.62 per share.

According to CNN Money, the 26 analysts, offering 12-month forecasts regarding Lowe’s stock price, have a median target of $89.00, with a high estimate of $100.00 and a low estimate of $69.00. The median estimate is a 21.90% surge compared to the closing price of $73.01 on August 23rd.

The same media also reported that 14 out of 28 surveyed investment analysts had rated Lowe’s stock as “Buy”, while 10 – as “Hold”.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, todays levels of importance for the Lowes stock are presented as follows:

R1 – $73.25
R2 – $73.50
R3 (Range Resistance – Sell) – $73.74
R4 (Long Breakout) – $74.47
R5 (Breakout Target 1) – $75.32
R6 (Breakout Target 2) – $75.74

S1 – $72.77
S2 – $72.52
S3 (Range Support – Buy) – $72.28
S4 (Short Breakout) – $71.55
S5 (Breakout Target 1) – $70.70
S6 (Breakout Target 2) – $70.28

By using the traditional method of calculation, the weekly levels of importance for Lowe’s Companies Inc (LOW) are presented as follows:

Central Pivot Point – $74.99
R1 – $76.77
R2 – $79.89
R3 – $81.67
R4 – $83.44

S1 – $71.87
S2 – $70.09
S3 – $66.97
S4 – $63.84