3 Large Retailers Release 4th-Quarter Earnings Results

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- By Alberto Abaterusso

Before the opening bell on Wednesday, these large consumer cyclical caps released earnings results for the fourth quarter of their fiscal year, which ended Feb. 1.

Lowe's Companies Inc. (LOW) posted non-GAAP earnings of 80 cents per share and GAAP loss of $1.03 per share for the final quarter of fiscal 2018.

Revenue grew 1% from the prior-year quarter to $15.65 billion, but missing expectations by $100 million.


From the prior-year quarter, Lowe's also recorded a 1.7% increase in comparable-store sales and a 2.4% soar in comparable sales for the U.S. home improvement business.

Year-over-year, these are the other most relevant changes for the quarter: a 70 basis-point decline in the gross margin to 31.3%; 9.92 percentage-point growth in selling, general and administrative expenses to 32.6%; and a 10.3% jump in the merchandise inventory to $12.56 billion. During the trimester, the company implemented share repurchase programs for $529 million and paid dividends of $387 million.

Lowe's Companies Inc. is a Mooresville, North Carolina-based home improvement retailer. In the past 12 months through Feb. 1, Lowe's Companie has run 2,015 home improvement and hardware stores in North America and Mexico.

Looking ahead, Lowe's Companies guided approximately 2% growth in total sales, about 3% increase in comparable-store sales, a 375 to 385 basis point rise in the operating margin rate, and 85 to 95 basis points growth in the adjusted operating rate in fiscal year 2019. In addition, the company forecasted that diluted earnings will range between $6 and 6.1 per share.

Shares of Lowe's Companies were trading around $105 at close on Tuesday for a market capitalization of $84.33 billion. The share price increased 17% for the 52 weeks through Feb. 26 and is now above the 200-, 100- and 50-day simple moving average lines. The closing price on Tuesday was 29.4% off the 52-week low of $81.16 and 12.1% below the 52-week high of $117.70.

Wall Street expects Lowe's Companies to outperform the industry or the overall market within the next 52 weeks. The average target price is $110.55 per share.

For the final quarter of fiscal 2019, Best Buy Co. Inc. (BBY) posted non-GAAP earnings of $2.72 per share, beating consensus by 16 cents and GAAP earnings of $2.69 per share beating consensus by 12 cents.

Revenue fell 3.8% from the prior-year quarter to $14.8 billion, beating expectations by $120 million.

During the quarter, comparable sales were up 3.0% and domestic comparable online sales grew 9.3%.

Non-GAAP operating income was 6.7% of total sales, reflecting a 0.3 percentage-point increase from the prior-year quarter. GAAP operating income was 6.6% of total sales, reflecting a 1.6% percentage-point jump from the same quarter of fiscal 2018.

In addition, the company has announced that it will replace its old share repurchase program with one valued at $3 billion.

For full fiscal year 2020, Best Buy anticipates that revenue will range between $42.9 billion and $43.9 billion versus a consensus of $43.39 billion, and earnings will range between $5.45 and $5.65 per share compared to expectations on earnings for $5.48 per share.

Best Buy Co. Inc. is a Richfield, Minnesota-based retailer of technology products, services and solutions. The retailer operates approximately 1,200 large stores and 300 small stores in North America and Mexico.

Shares of Best Buy Co. Inc. were trading around $60.3 at close on Tuesday for a market capitalization of $16.23 billion. The share price decreased 17% for the 52 weeks through Feb. 26 and is now below the 200- and 100-day simple moving average lines but still above the 50-day SMA line. The closing price on Tuesday was 26.4% above the 52-week low of $47.72 and 40% off the 52-week high of $84.37.

Wall Street recommends holding shares of Best Buy Co. Inc. and estimates an average target price is $68.75 per share.

For the final quarter of fiscal 2019, TJX Companies Inc. (TJX) posted GAAP earnings of 68 cents per share, which was in line with expectations.

Revenue grew 1.6% from the prior-year quarter to $11.13 billion, beating expectations by $110 million.

Driven by a 7% increase in comparable sales of its Marmaxx brand, same-store sales were up 6%, topping consensus by 2.5 percentage points during the quarter. The company reported growth in the same store sales across all its four segments of Marmaxx, HomeGoods, TJX Canada and TJX International.

In addition, TJX Companies Inc. announced its plan to hike by 18% the cash quarterly dividend of 19.5 cents per ordinary share and implement share repurchase programs of $1.75 billion to $2.25 billion.

For full fiscal year 2020, TJX Companies anticipates that diluted earnings per share will range between $2.55 and $2.60 versus a consensus of $2.60 per share.

TJX Companies is a Framingham, Massachusetts-based off-price apparel and home fashion retailer. In the past 12 months through Feb. 1, the retailer operated 4,306 stores in North America and in seven other countries, as well as three e-commerce sites.

Shares of TJX Companies Inc. were trading around $49.7 at close on Tuesday for a market capitalization of $61.31 billion. The share price increased 20% for the 52 weeks through Feb. 26 and is slightly above the 200- and 100-day simple moving average lines and substantially over the 50-day SMA line. The closing price on Tuesday was 24.7% off the 52-week low of $39.86 and 14% below the 52-week high of $56.64.

Wall Street has issued an overweight recommendation rating on shares of TJX Companies Inc. indicating that analysts foresee the stock outperforming either the overall market or the industry with an average target price of $54.32 per share.

Disclosure: I have no positions in any security mentioned.

This article first appeared on GuruFocus.


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