Lowe’s second quarter results, shares soar
Shares of the nation’s second largest home improvement retailer, Lowe’s (NYSE:LOW) , rose by 5.75% in early trading on Wednesday as the company reported a better than anticipated second quarter. The company reported a quarter above analysts consensus estimates in addition to upping its full year guidance for earnings and revenues. Over the last few weeks some traders have speculated the housing recovery may be starting to stall, putting pressure on shares of the company. However, management begs to differ and even believes its previous estimates were overly bearish.
The company earned $941 million, or $0.88 a share. Up from $747 million, or $0.64 a share, in the second quarter of last year. Revenue increased 10% to $15.71 billion from $14.25 billion. These results came in better than analyst estimates of $0.79 earnings per share on revenue of $15.07 billion. Revenue at stores open at least a year climbed 9.6%, a good indicator of past store strength. Efficiency programs helped the company’s margins; gross margin widened to 34.4% from 33.9%.
Lowe’s now predicts fiscal 2013 earnings of $2.10 a share, with revenue up roughly 5%. The company previously predicted earnings of about $2.05 a share, with revenue up approximately 4%. Based on 2012’s revenue of $50.52 billion, the new growth estimates translate into about $53 billion in revenue.
Shares of Home Depot (NYSE:HD) traded slightly lower in the morning following the report. One analyst in particular stated she believe Home Depot would be losing market share to Lowe’s in the near future as a result of a strong selection of merchandising. Lowe’s has actively looked to offer everyday low prices on its most popular items, whereas the company focused on sale initiatives in the past. It looks as if these programs have finally started to bear fruit without too much damage to margins. Going forward, analysts will be watching the housing market with laser focus, any fluctuations in demand could greatly affect revenue growth for the company.
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