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Why Lowe's Stock Surged Today

By Joe Tenebruso – Aug 18, 2021 at 6:16PM

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CEO Marvin Ellison sees more market-share gains ahead.

What happened

Shares of Lowe's Companies (LOW -0.88%) popped 9.6% on Wednesday after the home improvement retailer delivered solid second-quarter results.  

So what

Lowe's total sales rose 1% year over year to $27.6 billion. That was above Wall Street's estimates for revenue of $26.9 billion. 

The better-than-expected performance was driven by robust growth in Lowe's professional and installation services. Sales in those segments increased 21% and 10%, respectively. A 7% rise in e-commerce sales also contributed to the gains.

A carpenter is blowing sawdust off a wooden table.

Lowe's Companies is winning more business from professional contractors. Image source: Getty Images.

"Our strong results this quarter demonstrate that our Total Home strategy is working, with U.S. sales comps up 32% on a two-year basis," CEO Marvin Ellison said in a press release.

Better still, the company's productivity initiatives are helping Lowe's become more profitable as it expands its revenue base. Its adjusted earnings, in turn, jumped 13% to $4.25 per share. That, too, bested analysts' expectations, which had called for earnings per share of only $4.01. 

Now what 

These results prompted management to boost its full-year sales forecast from $86 billion to $92 billion. Lowe's also expects its operating margin to improve to 12.2%, up from 10.8% in 2020. 

"Looking forward, I am confident in the positive outlook for our industry, and our ability to drive operating margin expansion and market share gains," Ellison said.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Lowe's. The Motley Fool has a disclosure policy.

Stocks Mentioned

Lowe's Companies Stock Quote
Lowe's Companies
$201.77 (-0.88%) $-1.79

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