Did Lowe’s Just Win the Home Improvement War in Q2?

Lowe’s Companies Inc. (NYSE: LOW | LOW Price Prediction) released its fiscal second-quarter financial results before the markets opened on Wednesday. The home improvement retailer said that it had $2.15 in earnings per share (EPS) and $21.0 billion in revenue, compared with consensus estimates that called for $2.00 in EPS and $20.94 billion in revenue. In the same period of last year, it said it had EPS of $2.07 on $20.89 billion in revenue.

During the latest quarter, comparable sales increased 2.3% year over year. Comparable sales specifically for the U.S. home improvement business increased 3.2%.

For a basis of comparison, Home Depot’s second-quarter report said that it had $3.17 in EPS and $30.8 billion in revenue, compared with consensus estimates of $3.08 in EPS and $30.98 billion in revenue. The same period of last year reportedly had EPS of $3.05 on $30.46 billion in revenue. Comparable sales for the second quarter of fiscal 2019 were positive 3.0%, and comparable sales in the United States were positive 3.1%.

Looking ahead to the 2019 fiscal full year, Lowe’s expects to see EPS in the range of $5.45 to $5.65 and total sales are expected to increase 2%. The consensus estimates are calling for $5.57 in EPS and $72.5 billion in revenue for the year.

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Marvin R. Ellison, Lowe’s president and CEO, commented:

We capitalized on spring demand, strong holiday event 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 U.S.  This is a reflection of a solid macroeconomic backdrop and continued momentum executing our retail fundamentals framework.

Shares of Lowe’s closed Tuesday at $97.87, in a 52-week range of $84.75 to $118.23. The consensus price target is $113.90. Following the announcement, the stock was up about 12% at $109.99 in early trading indications Wednesday.

Home Depot shares were only up about 2% in response to earnings. Although, keep in mind that prior to earnings Home Depot was up about 18% year to date while Lowe’s was only up 2%, so there was room to run.

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