Lowe’s Companies, Inc. (NYSE:LOW), the second largest home improvement retailer worldwide, reported analyst-beating second-quarter earnings.
Backed by an improved housing market, the retailer’s net income jumped 26 percent to $941 million, or 88 cents a share, up from $747 million or 64 cents, during the past year.
Beats analysts’ estimates
During the last quarter, Lowe’s Companies, Inc. (NYSE:LOW) exceeded the average analysts’ estimates of 79 cents, as projected in a Bloomberg survey.
The second largest home improvement retailer’s sales have long trailed those of rival The Home Depot, Inc. (NYSE:HD). Yesterday, Home Depot Inc. posted its second quarter earnings which also beat analysts’ expectations, and raised its annual forecast backed by the surge in shoppers due to recovery in the housing segment.
However, Lowe’s Companies, Inc. (NYSE:LOW) net income jumped 26 percent thanks to customers’ engaging in more transactions and spending more per trip. thereby driving revenue growth.
Factors aiding Lowe’s strong performance
Lowe’s chairman and CEO Robert Niblock ascribed his company’s execution capabilities, besides better home improvement demand, as reasons for the strong quarter performance. In the earnings release, he indicated: “We drove a healthy balance of ticket and transaction growth, and delivered solid performance across all product categories”.
Saabira Chaudhuri of The Wall Street Journal notes in a bid to catch up with The Home Depot, Inc. (NYSE:HD), Lowe’s has been reviewing its product lines and resetting areas of its stores as it tries to refresh what it sells to better suit customers and as it steers toward everyday low prices rather than sales promotions.
Steve Schaefer of Forbes feels despite worries about possible higher mortgage rates impacting buyer demand, housing-related retailers like Home Depot, and Lowe’s Companies, Inc. (NYSE:LOW) continues to post strong performance. Steve Schaefer highlighted the remarks of Home Depot executive’s Tuesday conference call that the housing recovery is still in its early innings.
Enthused by Lowe’s Companies, Inc. (NYSE:LOW) strong performance, Christopher Horvers of JP Morgan Chase upgraded Lowe’s shares to Overweight, the equivalent of a Buy rating, as the analyst feels the retailer is making steady progress with its turnaround.