Lowe's rides housing recovery to 2Q profit
MOORESVILLE, N.C. -- Lowe's second-quarter net income rose 26 percent as Americans feeling good about sprucing up their homes again snapped up indoor and outdoor home products and supplies.
The second-largest home-improvement chain's results beat Wall Street expectations. It also raised its full-year earnings and revenue forecasts Wednesday, and the stock rose $1.73, or 3.9 percent, to close at $45.81.
The strong performance comes a day after rival Home Depot Inc.'s results also topped analysts' estimates and it lifted its outlook. It shows that as home values improve Americans are stepping up home improvement projects.
"Home improvement demand was strong during the quarter," said Lowe's CEO Robert Niblock. "We drove a healthy balance of ticket and transaction growth, and delivered solid performance across all product categories."
After slumping for years, the housing market has shown choppy but steady improvement this year. On Friday, the Commerce Department said that builders began work on houses and apartments at a seasonally adjusted annual rate of 896,000 in July. That was up 6 percent from June, though below a recent peak of more than 1 million in March.
And on Thursday the National Association of Home Builders/Wells Fargo builder sentiment index reported that confidence among U.S. homebuilders is at its highest level in nearly eight years, fueled by optimism that demand for new homes will drive sales growth into next year.
Still, there are indications that rising mortgage rates may give potential buyers a reason to pause.
For the period ended Aug. 2, Lowe's earned $941 million, or 88 cents per share. That's up from $747 million, or 64 cents per share, a year ago. Revenue increased 10 percent to $15.71 billion from $14.25 billion.
Analysts surveyed by FactSet expected earnings of 79 cents per share on revenue of $15.07 billion.