What happened
Shares of Lowe's (LOW 0.50%) were moving higher today after the home improvement retailer posted better-than-expected results in its third-quarter earnings report.
As of 11:57 a.m. ET on Wednesday, the stock was up 4.9%.
So what
In a challenging macroeconomic environment, Lowe's posted 2.2% growth in comparable-store sales (comps), or 3% in the U.S., and it edged out estimates on the top and bottom lines.
Revenue rose 2.4% to $23.48 billion, ahead of the consensus at $23.13 billion, with strong growth in the professional segment. The company also took a $2.1 billion asset impairment on its Canadian retail business, a sign that this business is underperforming.
On the bottom line, adjusted earnings per share increased 19.8% to $3.27 as the company controlled costs, topping estimates at $3.10.
CEO Marvin Ellison said:
We delivered better-than-expected results this quarter, with U.S. comps up 3%, driven by Pro growth of 19% and improved [do-it-yourself] sales trends. Sales on Lowes.com grew 12%, on top of 25% growth last year. We also drove substantial improvement in adjusted operating margin through disciplined execution and cost management.
During the quarter, Lowe's also continued its aggressive share buyback program, retiring 20.5 million shares for $4 billion.
Now what
Lowe's expects total sales for the year, which includes a 53rd week, of $97 billion to $98 billion, down slightly from its earlier guidance of $97 billion to $99 billion, but ahead of the consensus at $96.97 billion. On the bottom line, it raised its adjusted EPS outlook from a range of $13.10 to $13.60, to a new range of $13.65 to $13.80; the average estimate is $13.54.
Rival Home Depot delivered strong results as well yesterday, showing along with Lowe's that the home improvement retail sector remains resilient in the face of macro headwinds. Though a sustained decline in the housing sector would affect home improvement retail, for now, these stocks look like winners.
