Here is why Lowe’s Companies’ shares popped

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Lowe’s Companies Inc. (NYSE: LOW) stock is up 3% premarket after the company announced Q4 2021 earnings and revenue topped analyst estimates. CEO Marvin Ellison commented:

We delivered another year of outstanding performance in 2021, as we gained market share across DIY and Pro through our Total Home strategy. I would like to thank our front-line associates for their tremendous efforts this year.

Q4 2021 earnings grew 34% YoY

The company recorded net earnings of $1.2 billion or diluted earnings of $1.32 per share. Analysts had estimated that the company could post earnings of $1.70 per share. A year ago, the company had net earnings of $978 million or diluted EPS of $1.32. The company’s Q4 EPS was up 34%  from adjusted diluted earnings of $1.33 per share a year ago.

Total revenue in Q4 2021 was $21.3 billion, a 5% growth from Q4 2020’s sales of $20.3 billion. Analysts had predicted that the company would post revenue of $20.87 billion. Comp sales for the US home improvement business were up 5.15 while pro customer sales grew 23% in the fourth quarter. Ellison said:

In 2021, we increased comparable sales by 6.9% while generating over 170 basis points of operating margin improvement, with our relentless focus on productivity and enhanced pricing strategies. We remain confident in the long-term strength of the home improvement market, and our ability to expand operating margin.

Lowe’s awarded front-line associates a $265 million bonus.

In Q4 2021, Lowes awarded a discretional end-year bonus to front-line associates of around $265 million. The award was in recognition of their efforts during the COVID-19 pandemic in 2021. It was also the 8th successful quarter of 100% of the company’s stress earning a Winning together bonus that resulted in an expected payout of $94 million to the associates.

The company repurchased arod16 million shares in Q4 for $4 billion, and for the year, it repurchased 63 million shares for $13.1 billion. In addition, Lowe’s paid $551 million in dividends in Q4 and $2 billion in 2021.

For the full year 2022, the company expects $97 billion to $99 billion with diluted earnings of between $13.1 per share and $13.6 per share. 

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