Lowe’s Companies, Inc. Earnings Cheat Sheet: Margins Shrink on Rising Costs, Net Income Falls

S&P 500 (NYSE:SPY) component Lowe’s Companies, Inc. (NYSE:LOW) reported its results for the second quarter. Lowe’s Companies Inc. is a home improvement retailer offering products to homeowners, renters and commercial business customers.

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Lowe’s Companies Earnings Cheat Sheet for the Second Quarter

Results: Net income for Lowe’s Companies, Inc. fell to $830 million (68 cents per share) vs. $832 million (58 cents per share) a year earlier. This is a decline of 0.2% from the year earlier quarter.

Revenue: Rose 1.3% to $14.54 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: LOW reported adjusted net income of 68 cents per share. By this measure, the company beat the mean estimate of 67 cents per share. Analysts were expecting revenue of $14.78 billion.

Quoting Management: “Despite some recovery in our seasonal business, our performance for the quarter fell short of our expectations,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “We are working diligently to improve sales and profitability in the near-term in a way that we believe will generate sustained customer preference and shareholder value. We are also building momentum in 2011 behind our longer-term commitment to deliver even better customer experiences.”

Key Stats:

Gross margin shrank 0.4 percentage point to 34.5%. The contraction appeared to be driven by increased costs, which rose 1.8% from the year earlier quarter while revenue rose 1.3%.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 5.7% from the year earlier quarter.

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by 2 cents with net income of 34 cents versus a mean estimate of net income of 36 cents per share.

Revenue rose last quarter after seeing a drop the quarter before. Revenue fell 1.6% to $12.19 billion in the first quarter from the year earlier.

Competitors to Watch: The Home Depot, Inc. (NYSE:HD), Builders FirstSource, Inc. (NASDAQ:BLDR), Lumber Liquidators Hldgs., Inc. (NYSE:LL), Tractor Supply Company (NASDAQ:TSCO), Hornbach-Baumarkt-AG (NYSE:HBM), PulteGroup (NYSE:PHM), Toll Brothers (NYSE:TOL), D.R. Horton (NYSE:DHI), KB Home (NYSE:KBH), Lennar Corp (NYSE:LEN), Beazer Homes (NYSE:BZH), Sherwin-Williams (NYSE:SHW), Sears Holdings (NASDAQ:SHLD), Target (NYSE:TGT) and Wal-Mart (NYSE:WMT).

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(Source: Xignite Financials)