Tuesday, May 22, 2012

Net Payout Yield Protection From Lowe's

Prior to the market open on Monday, Lowe's Companies (LOW) reported earnings that generally met expectations. Unfortunately, though, the stock sank roughly 10% as guidance disappointed the market.

The home improvement retailer still sees a weak housing market contributing to the soft guidance. Competitor Home Depot (HD) had some similar statements last week. The market didn't hammer it as badly, as investors see Home Depot as taking market share. Its stock is actually up over 1% during the day, confirming that most investors think the issue is Lowe's related.

So most investors are left wondering what to do with the stock now.

Fortunately for longs the stock has plenty of yield support from both a 2% dividend yield and a monstrous buyback. The company spent nearly $1.7B buying back stock in Q112 and expects to spend another $2.75B over the rest of the year. See the below comment from the CFO via the earnings call transcript:

Read the full article at Seeking Alpha.


Disclosure: Long HD and LOW. Please review the disclaimer page for more details. 



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