Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) are the two largest home-improvement specialty retailers in the world and both have recently released their first-quarter results. Let's compare their earnings results and outlooks on the rest of fiscal 2014 to determine which had the better quarter and could provide the highest returns for investors going forward.

Breaking down the financial results

Storeexterior

Source: Home Depot

Home Depot released its first-quarter report before the market opened on May 20 and the results were mixed compared to analysts' expectations; here's a breakdown and year-over-year comparison:

MetricReportedExpected
Earnings Per Share $1.00 $0.99
Revenue $19.69 billion $19.95 billion

Source: Benzinga

  • Earnings per share increased 20.5%
  • Revenue increased 2.9%
  • Comparable-store sales data:
    • 2.6% growth globally
    • 3.3% growth in the United States
  • Gross profit increased 3.1% to $6.89 billion
  • Gross margin expanded 10 basis points to 35%
  • Operating profit increased 8.7% to $2.28 billion
  • Operating margin expanded 60 basis points to 11.6%
  • Repurchased $1.25 billion worth of its common stock
  • Paid $646 million in dividends
  • Opened zero new stores, leaving its total store count at 2,263
  • Other most notable update: Home Depot announced that it intends to repurchase an additional $3.75 billion worth of its common stock over the next three quarters, resulting in approximately $5 billion of repurchases for the full year.

Lowes

Source: Lowe's

Lowe's released its first-quarter report before the market opened on May 21 and the results were mixed compared to analysts' expectations as well; here's a breakdown and year-over-year comparison:

MetricReportedExpected
Earnings Per Share $0.61 $0.60
Revenue $13.40 billion $13.91 billion

Source: Benzinga

  • Earnings per share increased 24.5%
  • Revenue increased 2.4%
  • Global comparable-store sales increased 0.9%
  • Gross profit increased 4.5% to $4.76 billion
  • Gross margin expanded 70 basis points to 35.5%
  • Operating profit increased 8.7% to $1.07 billion
  • Operating margin expanded 50 basis points to 8%
  • Repurchased $850 million worth of its common stock
  • Paid $186 million in dividends¬†
  • Opened four new stores, bringing its total store count to 1,836
  • Other most notable update: Lowe's stated that "poor weather" greatly affected sales in the first quarter, but does not expect this to negatively impact its full-year growth expectations and noted that its performance has shown improvement in May.

What about the remaining three quarters?

Screen Shot

Source: Home Depot

Following its strong first quarter, Home Depot reaffirmed its revenue growth expectations and raised its earnings per share guidance for the full year; here's what the company now expects to achieve:

  • Earnings per share of approximately $4.42, up 0.9% from its previous guidance of $4.38
  • Revenue growth of approximately 4.8%
The new earnings per share guidance would result in growth of 17.6% from fiscal 2013 and the increase reflected Home Depot's plan to repurchase $5 billion worth of its common stock during the year. Also, although Home Depot did not reaffirm these statistics directly, I think it is safe to assume that the company continues to anticipate comparable-store sales growth of approximately 4.6% and the openings of seven new stores during fiscal 2014.

Nsi

Source: Lowe's

In its report, Lowe's reaffirmed most of its growth expectations, but raised its earnings per share guidance and reduced the numbers of stores it plans to open in fiscal 2014; here's the new outlook:

  • Earnings per share of $2.63, up 1.1% from its previous guidance of $2.60
  • Revenue growth of 5%
  • Comparable-store sales growth of 4%
  • The openings of 10 new home improvement stores and five new hardware stores, down from its previous expectations of 15 new home improvement stores and five new hardware stores
Lowe's updated outlook calls for earnings-per-share growth of 22.3% from fiscal 2013 and would push revenue over $56 billion for the full year; the company noted that the new earnings per share outlook resulted from a lower tax rate and I think the $850 million in share repurchases during the first quarter played a role in the increase as well. Also, I believe the slowing of the expansion plans was a smart move by management, just in case it were faced with another period of "poor weather."

And the winner is...
After comparing the companies' quarterly results and outlooks on the rest of 2014, the winner of this match-up is Home Depot. Home Depot reported strong growth in almost every key financial category and its comparable-store sales growth far outpaced that of Lowe's, which has been a common theme over the last several quarters. Also, its outlook calls for substantial growth and it will return over $7 billion to investors during the year via share repurchases and its very safe 2.35% dividend. Foolish investors should strongly consider initiating positions in Home Depot right now and adding to them on any weakness provided by the market.

Joseph Solitro has no position in any stocks mentioned. The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.