Monday, February 22, 2010

Lowe's -- Is It Blind Man's Bluff

Lowes (LOW) reported Q4 earnings headlining the new $5 billion dollar share re-purchase program. For the fiscal year ended January 29, 2010, net earnings declined 18.8 percent to $1.78 billion and diluted earnings per share also declined 18.8 percent to $1.21. Robert A. Niblock, Lowe’s chairman and CEO said improvement in many bigger-ticket, project categories, provides an encouraging sign that consumers are gaining the confidence to take on more discretionary projects.

When you look at the earnings release there is no information on product lines or regions. But the CEO is thinking that consumers are starting to move to bigger ticket projects. There is just such a huge gap between executive comments and tangible information the investor will find this difficult to swallow. This increases the risk of surprises as the investor play blind man’s bluff.