On Tuesday morning, Lowe's (NYSE: LOW) issued a cautious earnings outlook for the coming year. On a more positive not, the home-improvement giant actually expects same-store sales to increase, bringing an end to several years of same store sales declines. LOW's announcement was accompanied by a reiteration of its expectations for the fiscal year. It expects to open 66 stores this fiscal year, and as many as 45 in the next fiscal year (which starts on January 30). For the coming year, LOW believes it will earn $1.24 to $1.34 per share with revenue growth of 3% to 4% and a same-store sales rise of roughly 1%. The current estimates from the Street call for earnings of $1.34 per share and a 3% revenue increase.
A reason to be bullish on LOW is that many of today's consumers are concerned about keeping their homes in shape, especially since many will be staying there longer than maybe they initially planned. With more at-home projects undertaken by the consumer, home-improvement stores look to make more money. With LOW believing it can gain market share in what it calls a "highly fragmented industry," the company could be one to watch in the coming months.
Technically, the stock faces overhead resistance from its 50-month moving average. The last time the equity finished atop this trendline was the end of 2007. With such resistance lurking, it makes the stock look a little less lustrous.
If you are thinking about investing in LOW, you may want to wait and see if it can topple the overhead technical resistance. A clear break of this resistance could be a buy signal, but only if LOW can put some distance between it and the technical hurdles.
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