Home Depot's (NYSE:HD) self-improvement continues. After archrival Lowe's (NYSE:LOW) spectacular report yesterday, Home Depot followed through by hammering prior estimates and raising guidance.

Third-quarter revenues rose 15% over last year to $16.6 billion. Meanwhile, as net income grew 22% to $1.15 billion, EPS jumped 25% to $0.50 per share, reflecting $890 million in share repurchases. Wall Street had expected earnings of $0.46 per share on $16.15 billion in revenues.

But most importantly, same store sales increased 7.8%.

Back in January, the company unveiled its fix-it plan as the stock flirted with five-year lows. Same-store sales were declining, partially due to stiff competition from Lowe's and partially to internal problems. But after a tough 2002, it looks like Home Depot is back on track.

To improve efficiency, Home Depot installed self-checkout stations in 760 of its 1,643 stores by the end of the quarter. As a result, customer transactions grew 9.4% to 313 million, with more than 40 million of those transactions done through self-checkout. At the same time, the average ticket grew 4.9% to $52.10 -- the highest in history.

As Home Depot continues to position itself for growth, service business revenues grew 45%. Just last week, the company took another step in that direction, announcing the acquisition of privately held RMA Home Services, a company that specializes in the installation of replacement windows and siding.

The strong quarter led management to raise its full-year guidance for growth in EPS to between 15% and 17%. Lowe's exceptional performance is hard to ignore, and it probably is worth a premium to Home Depot. But the nation's second-largest retailer is showing that it's not done yet.

Is Home Depot fixed? Or is Lowe's going to pound it into the ground? Talk it up on the Home Depot and Lowe's discussion boards! Only at Fool.com. Jeff Hwang can be reached at JHwang@fool.com.