Monday, May 17, 2010

Lowes Still Broken

Lowes (LOW) reported supposed improved results. The earnings release trumpets net earnings up 2.7% and diluted earnings per share increased 6.3 percent. What they fail to point out is that net sales are up 5% but they can only increase net earnings by 2.7%. The enterprise is not leveraged for improvement which is very worrisome considering the supposed cost cutting and improvements of recent past. Also look at the shrinking gross margin. At this stage in the recovery they should be improving margins.

Something seriously wrong with the business model. The increase in dividend is just an anaesthetic for sleepy investors.

Disclosure: No position in this stock