Lowe's Companies Inc (NYSE:LOW) on Wednesday reported third-quarter earnings that slightly beat analysts’ estimates and raised its full-year guidance, signaling resilience in the home improvement sector despite ongoing economic headwinds.
The home improvement retailer posted adjusted earnings per share of $3.06 for Q3, up 5.9% from a year earlier and above the Street’s estimate of $2.97.
Revenue came in at $20.81 billion, up 3% from a year ago, just shy of analysts’ $20.85 billion forecast, while comparable sales rose 0.4%.
Operating income fell 2% to $2.48 billion, while net income declined 5% to $1.62 billion. Gross margin improved to 34.2% from 33.7% a year ago, reflecting strong pricing and cost management, although selling, general and administrative expenses as a percentage of sales increased to 20% from 19% in the prior year.
US comps were supported by 11.4% online sales growth, double-digit expansion in home services, and continued strength among professional (Pro) customers. Lowe’s completed its $8.8 billion acquisition of Foundation Building Materials (FBM) during the quarter.
Lowe’s raised its full-year revenue forecast to around $86 billion, up from prior guidance of $84.5 billion to $85.5 billion, while adjusted EPS guidance was narrowed to about $12.25. Comparable sales are now expected to be roughly flat.
Analysts at Jefferies said positive comp sales for Q3 and early November should ease investor concerns over the home improvement sector. “Housing and labor market strains are deferring projects, but there’s no clear evidence that organic homeowner engagement is falling off a cliff,” they noted.
Shares of Lowe’s rose 3.7% in early trading following the results.