Lowe's Earnings Beat After Home Depot Blows Past Q3 Expectations As Renovation Boom Continues

Lowe's (LOW) topped third-quarter estimates aboriginal Wednesday. LOW banal and larger rival Home Depot (HD) roseate somewhat earlier the open, aft beardown Home Depot net and an upbeat October retail income study sent some betterment giants soaring past add-on bargain points.

X

The results amazed analysts projecting muted results, arsenic the location buying and renovation roar that's lasted done astir of the pandemic had appeared to beryllium taking a breather. Borrowing rates stay low, but rising labour costs and proviso concatenation issues person driven terms spikes for gathering materials. Analysts were acrophobic that those precocious prices would impulse consumers to deliberation doubly astir remodeling projects.

The terms of lumber had been declining aft hitting highs earlier successful the pandemic, but has ticked up again recently. Lumber prices spiked to much than $1,600 per 1,000 committee feet successful May 2021. Prices had travel backmost down to the $500 scope successful the summer. But they person since climbed backmost supra $600 implicit past month, hitting the $700 level successful aboriginal October.

Homebuyers are besides balking astatine sky-high location prices successful galore areas of the country. In addition, consumers are pumping the brakes connected location spending arsenic nutrient and state prices soar amid rising inflation.

Lowe's Earnings

Estimates: Wall Street saw Lowe's net per stock of $2.34, 18% supra the aforesaid play past year. Sales were expected to diminution 1.4% to $22 billion, with same-store income down 1.7%.

Results: Lowe's net per stock reached $2.73 a share, portion gross unexpectedly roseate 2.7% to $22.92 billion. Same-store income grew 2.2%.

On Nov. 12, Lowe's declared a quarterly currency dividend of 80 cents a share.

Outlook: Lowe's sees full-year gross of astir $95 billion, somewhat supra consensus. It plans stock buybacks of $12 billion.

Stock: LOW banal roseate 1.3% to 248 earlier the open. Shares roseate 4.2% to 244.69 connected Tuesday, pushing supra three-weeks-tight entry astatine 239.37. The three-weeks-tight offers existing investors a accidental to adhd a fewer much shares. The bargain portion extends to 251.34, but investors privation to bargain arsenic adjacent to the choky introduction arsenic possible.

Lowe's comparative spot enactment is trending upward. Its RS Rating is 86, portion its EPS Rating is 90.

Over the past twelvemonth oregon so, Lowe's has focused its attraction connected nonrecreational contractors. In a caller survey, Lowe's said these customers worked connected astir 11 projects per period successful 2021, and it expects that fig to summation by 45% successful 2022.

Home Depot Earnings

Estimates: FactSet forecast Home Depot net per stock of $3.41, 7% supra the year-ago quarter. Revenue was seen coming successful astatine $34.88 billion, 4% higher than past year.

Results: Home Depot connected Tuesday reported net per stock up 23% successful the August-October quarter, to $3.92, successful a 4th consecutive net surprise. Revenue roseate astir 10% to $36.82. Total comparable income accrued 6.1%, with U.S. comparable income rising 5.5%. Gross margins of 34.1% were down 5 ground points, twelvemonth implicit year.

Home Depot Stock

Shares roseate a fraction earlier the unfastened connected the stock marketplace today. HD banal gapped up 5.8% to 392.43 connected Tuesday. That summation sent Home Depot banal past a three-weeks choky signifier introduction astatine 375.25. Shares technically stay successful a bargain scope done 394.01.

The banal blew past a cup-with-handle buy point of 338.64 respective weeks ago, according to MarketSmith.

Home Depot stock's relative spot line is trending up and adjacent multimonth highs. Its RS Rating is 80 retired of a imaginable 99. Its EPS Rating is 90, arsenic it's notched 5 consecutive quarters of net growth. However, some gross and net maturation person slowed successful caller quarters.

Rival home-improvement banal Floor & Decor (FND) spiked 6% Tuesday, aft Warren Buffett's Berkshire Hathaway (BRKB) disclosed it took a caller involvement successful Floor & Decor successful Q3.

Please travel Adelia Cellini Linecker connected Twitter @IBD_Adelia.

YOU MAY ALSO LIKE:

Why This IBD Tool Simplifies The Search For Top Stocks

Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader

How To Know It's Time To Sell Your Favorite Stock

Market Rally Back At Highs; 3 Stocks In Buy Zones