Lowe's stock is climbing in early trading Wednesday, after the home-improvement retailer's fiscal second-quarter came in ahead of expectations, in contrast to Home Depot's post-earnings stock performance.
Lowe's (ticker: LOW) earned $3.02 billion, or $4.25 a share, up from $3.74 a share in the year-ago period. Sales were up 1% year over year to $27.57 billion. Analysts were looking for EPS of $4.01 on revenue of $26.84 billion. Same-stores sales fell 1.6%, although that decline was smaller than expected.
For the full year, Lowe's is looking for revenue of $92 billion, above the $91.1 billion consensus estimate.
Lowe's stock is up 7.9% to $196.58 in recent trading; the shares have climbed 22.6% year to date and more than 24% in the latest 12 months. The stock has gained about 28% since Barron's recommended it earlier this year.
The report was a relief for Lowe's investors, given that Home Depot's (HD) results showed a faster-than-anticipated slowdown in comparable sales , a big culprit behind the stock's slide. While Lowe's comps were negative, unlike Home Depot's, they were still stronger than the 2.2% decline analysts were expecting. Consensus also called for overall sales to fall year over year, whereas Lowe's was able to deliver an increase.
There were other positive contrasts to its larger rival as well. While its gross margins also fell—a common theme this earnings season as retailers across the spectrum deal with higher supply chain and freight costs—they were still roughly in line with expectations, while Home Depot's slipped below. (Lowe's also expects gross margins to be up slightly for the full year.) In addition, Lowe's provided forward sales guidance, which Home Depot did not.
Lowe's noted that August trends have remained strong, and digital sales in the quarter were up 7%, despite a 135% in the year-ago period.