Please ensure Javascript is enabled for purposes of website accessibility

Why Did Lowe's Companies, Inc. Stock Jump 12% in March?

By Daniel B. Kline - Apr 7, 2016 at 5:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company had a solid Q4 earnings report if you subtract a one-time charge.

Sometimes a single earnings report can reignite optimism in a stock.

That appears to be the case with Lowe's Companies (LOW -0.88%) Q4 results, as the Feb. 24 report's release sent the company's shares on a long, mostly steady climb through the month of March.

Source: YCharts.com

What: Lowe's shares closed February at $67.53, then steadily rose all through March before finishing the month at $75.75, a 12.17% climb, according to data provided by S&P Global Market Intelligence. That rise was driven largely by the company's positive earnings report, which showed that the company had net earnings of $11 million and diluted earnings per share of $0.01 for the quarter ended Jan. 29, 2016.

Those numbers include a non-cash impairment charge of $530 million related to the company exiting its joint venture in Australia. Without that impairment, Q4 looked a lot better, with adjusted net earnings of $541 million, a 20.2% increase over the same period a year ago.

So what: The home improvement company had a strong quarter, with sales growing 5.6% to $13.2 billion from $12.5 billion in the Q4 2014. It also had a good year with total comparable sales up 5.2%. In 2015 the company posted $59.1 billion in sale, a 5.1% increase over 2014.

"We capitalized on increased demand for exterior products as a result of warmer weather, while at the same time helped customers tackle interior projects, allowing us to deliver positive comps in all product categories," said CEO Robert A. Niblock in the Q4 earnings release.

Now what: Lowe's numbers are impressive in the short term, but they also show that the company's category, home improvement, has continued to prove resistant to online competition. It's not that the chain has not lost sales to digital competitors, but the want-it-now, hands-on nature of home repair has given it some protection.

That bodes well for the coming year because it does not appear that any of the major online retailers has anything planned which would cut into what Lowe's can do by operating a network of over 1,800 stores in the United States, Canada, and Mexico. These results simply verify that even as other brick-and-mortar chains struggle, Lowe's has found a recipe which may not be Internet-proof, but is at least Internet-resistant.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
LOW
$184.62 (-0.88%) $-1.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.