Lowe’s Jumps Higher on $10 Billion Stock Buyback Program Announcement

Home improvement retailer Lowe’s announced this week a $10 billion stock buyback program and also issued financial targets for fiscal 2019

Lowe’s is forecasting earnings per share to be in the range of $6 to $6.10 for fiscal 2019 while analysts were expecting earnings per share of $5.90. The company expects total sales to grow aroudn 2%. Sales at stores open for at least 12 months are expected to grow roughly 3%. Same-store sales are expected to grow 2.5%.

CEO Marvin Ellison has talked about the company’s steps to rivaling Amazon and growing sales. This includes shutting unprofitable stores and investing in e-commerce.

“We anticipate that targeted initiatives designed to drive profitable sales, combined with an expense reduction culture, will allow us to generate significant cash flow from operations over the next three years,” said CFO David Denton. “We are committed to investing in the business while also returning excess cash to shareholders, and strongly believe we can deliver substantial value to all stakeholders.”

“The decision [by Lowe’s] to refocus on the core home improvement business in the U.S. and Canada should serve as a tailwind in 2019, with some of the proceeds likely to be reinvested in the business,” Telsey Advisory Group analyst Joseph Feldman noted.

He added, “That should reflect a narrowing of the performance gap vs. its main competitor, Home Depot.”

Disclaimer: We have no position in Lowe’s Companies, Inc. (NYSE: LOW) and have not been compensated for this article.