Lowe’s Shares Break Out of Range on Earnings Beat


Lowe's Shares Break Out of Range on Earnings Beat

Lowe’s reported stronger than expected earnings data on Friday, contrary to indications that the consumer sector has weakened for the first quarter. The company’s adjusted earnings per share of 87 cents surpasses analysts’ estimates at 85 cents while revenue of $15.2 billion exceeded analysts’ estimates of $14.87 billion.

With that, Lowe’s shares broke out of the near-term resistance around $78 and is now eyeing the next barrier at $80. The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside, although the short-term moving average is closing in on the longer-term MA to suggest a possible crossover.

In that case, price could still retreat to the broken range resistance to fill the gap before heading further north. Stochastic is on the move up to indicate that buyers are still in control while RSI is also heading higher so Lowe’s shares could follow suit.

However, once these oscillators indicate overbought conditions, investors could book profits and trigger a short-term drop. After all, Lowe’s shares are currently trading around their 52-week highs. A larger selloff could take Lowe’s shares to the bottom of its longer-term range at $66.

In terms of guidance, management said it expects full-year earnings per share of $4.11, up from its previous forecast of $4 a share, with sales rising approximately 6% and same-store sales up about 4%. The first quarter marks the first time that the home improvement company was able to close the gap with rival Home Depot, indicating that it is gaining traction in the sector.

The earnings results also contrast with the bleak picture of the consumer sector, with mostly weak numbers from Macy’s, Target, JC Penney, and Nordstrom released earlier in the month.


To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.