Stock Soars as Lowe’s Reports Earnings and Revenue Beat Estimates

Shares of home improvement and hardware store Lowe’s surged in the middle of the week after the retailer posted a second-quarter earnings report that bested Wall Street forecasts. Lowe’s even beat immediate rival Home Depot in terms of same store sales growth (in the US) this quarter. As a matter of fact, the Lowe’s report even beat analyst estimates in terms of earnings, revenue, and same-store sales, indicating that CEO Marvin Ellison’s changes are starting to make a difference by drawing more customers. 

That in mind, the company’s stock jumped more than 12 percent in premarket trading (again, on Wednesday). 

These results could signal the beginning of a turnaround for a company that has been struggling for many years. The numbers definitely support this:  Adjusted earnings per share beat estimates ($2.15 vs $2.01, respectively); Revenue beat estimates ($20.99 billion vs $20.94 billion, respectively); same-store sales beat estimates (2.3 percent vs 1.9 percent, respectively). 

All this in mind, Ellison said, “We capitalized on spring demand, strong holiday even execution, and growth in paint, and our pro business to deliver strong second quarter results. Despite lumber deflation and difficult weather, we are pleased that we delivered positive comparable sales in all 15 geographic regions of the US.”

Indeed, lumber deflation has damaged the industry, dragging Home Depot a bit as well.  That company missed on sales and had to cut its outlook for the year, but still posted better-than-expected earnings. Home Depot has expressed concern over the potential consequences of new tariffs on Chinese goods; a new obstacle that many will face in the coming months and years. 

After all is said and down, Lowe’s has now posted earnings guidance for the year, ending January 31 has not changed: adjusted earnings per share will likely satisfy the $5.45 to $5.65 range.  Still, net income for Lowe’s is up 10 percent—to $1.68 billion—or about $2.14 a share (in the fiscal quarter ending August 2).  This is definitely better than the $1.52 billion, or $1.86 per share, from the year prior.