Lowe’s stock rises because profits show it’s not Home Depot

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Lowe’s stock rose early in trading on Wednesday, after the home improvement retailer’s fiscal second quarter beat expectations, unlike

Home deposit‘s

stock performance after earnings.

Lowe’s (ticker: LOW) earned $ 3.02 billion, or $ 4.25 per share, up from $ 3.74 per share a year ago. Sales increased 1% year-on-year to $ 27.57 billion. Analysts were looking for EPS of $ 4.01 for revenue of $ 26.84 billion. Comparable store sales fell 1.6%, although the decline was smaller than expected.

For the full year, Lowe’s is targeting revenue of $ 92 billion, above the consensus estimate of $ 91.1 billion.

Lowe’s stock is up 7.9% to $ 196.58 in recent trading; stocks are up 22.6% year-to-date and more than 24% in the past 12 months. The stock has gained around 28% since Barron recommended it earlier this year.

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The report was a relief for Lowe’s investors, given that Home Depot (HD) results showed a faster-than-expected slowdown in comparable sales, a big culprit behind the stock’s drop. While Lowe’s lineups were negative, unlike Home Depot’s, they were still stronger than the 2.2% drop analysts expected. The consensus also called for overall sales to decline year over year, while Lowe’s was able to record an increase.

There were also other positive contrasts with his biggest rival. While its gross margins also fell – a common theme this earnings season as retailers across the spectrum face higher supply chain and freight costs – they were still roughly in line with expectations, while Home Depot’s slipped below. (Lowe’s also expects a slight increase in gross margins for the full year.) In addition, Lowe’s provided forward sales forecasts, while Home Depot did not.

Lowe’s noted that August’s trends remained strong and digital sales in the quarter were up 7%, despite posting 135% a year ago.

Write to Teresa Rivas at [email protected]