Lowe's (LOW) is expected to report Q2 earnings before the open on Monday, August 20, with a conference call scheduled for 9:00 am ET. Analysts are looking for a profit of 70c on revenue of $14.46B. The consensus range is 64c-74c for EPS, and $14.04B-$14.98B for revenue, according to First Call. After reporting better than expected Q1 results, Lowe's forecast FY12 EPS $1.73-$1.83, consensus $1.80, on revenue growth of 1%-2%, consensus $50.59B. On its last earnings call, Lowe's forecast a 10% operating margin by 2015 through cost reductions and guided FY12 cash flow from operations of $4B. The company also said that store closings would negatively impact ROIC by 125bps and that recovery in big ticket projects was "constrained". During the quarter, Lowe's raised its quarterly dividend 14.3% to 16c per share and backed its FY12 same-store sales growth forecast of 1%-3%. At the Oppenheimer Annual Consumer Conference in June, Lowe's said it was holding a "cautious" view on the macro and consumer environment and that it was "difficult" to see if U.S. housing is going to turn. Lowe's also confirmed a non-binding proposal to acquire RONA for C$14.50 per share in cash. BMO Capital doesn't expect the RONA acquisition to affect Lowe's plan to return about $20B to shareholders over four years. The firm thinks that the valuation of the offer is reasonable. Janney downgraded Lowe's to Neutral from Buy based on valuations, moderating sales trends, the weaker macro backdrop, and more difficult comps. Analysts and investors will listen for comments from the retailer on its cost cutting initiatives and the housing market.
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