Lowes announced mixed first-quarter 2019 results and reduced its full-year outlook yesterday sending the stock down double digits, its worst one-day stock plunge since 1992.
The good news was Lowe’s quarterly sales grew 2.2% year over year, to $17.74 billion with a 3.5% increase in comparable-store sales. The bad news was Lowe’s revised its 2019 earnings per share outlook downward to a range of $5.45 to $5.65, from a previous range of $6 to $6.10 because they failed to raise prices in time to make up for higher costs.
What happened, according to Ellison, is this: Essentially, Lowe’s merchandising executives were accepting price increases from vendors on certain items without taking any offsetting action to raise retail prices. There are a number of ways it could have done that; typically, instead of raising retail prices on frequently-bought, highly competitive items, they might raise them in less price-sensitive categories.
None of that ever happened, though, because Lowe’s outdated systems and tools meant that his leaders, many of whom were new to their roles, did not “have a clear line of sight” about the cost increases, Ellison said. They didn’t fully understand the issue until the more expensive goods started hitting shelves, which wasn’t immediate, since goods go to stores on a first-in, first-out basis.
Back to some good news…analysts are still bullish on Lowes. According to Bloomberg data there are 22 buy recommendations, 10 holds and no sells with average price target of $117.
Lets go to the charts to see if the technical agree with the Analysts.
On the monthly chart, price is still in an uptrend.
but what concerns me is the latest impulse move couldn’t close above the previous pivot high.
So did price action form a double top, I don’t know yet, but the weekly zones to pay attention to for clues are the following:
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.