Lowe's sales beat estimates; shares hit record high
By Sruthi Ramakrishnan
(Reuters) - Lowe's Cos Inc (LOW.N: Quote) followed larger rival Home Depot Inc (HD.N: Quote) in reporting better-than-expected quarterly sales as strength in the U.S. housing market and favorable weather powered demand for building and home renovation products.
Shares of the home improvement chain, which also raised its profit forecast for the year ending Feb. 3, rose as much as 4 percent to a record high of $79.08, boosting the company's market value by about $2.5 billion.
In contrast, Home Depot's shares fell as much as 3 percent after reporting results on Tuesday, as investors viewed the stock as fairly valued following a more than 19 percent gain in the 12 months to Monday's close. Lowe's stock rose only 5 percent in the period.
Investors had been relatively negative on Lowe's stock prior to the earnings and the stock was "cheap" compared to the past three years, J.P. Morgan analyst Christopher Horvers wrote.
The outlook for the home-improvement industry remained positive for the rest of the year as gains in the job market and disposable income drive consumer spending, Chief Executive Robert Niblock said on a conference call on Wednesday.
U.S. housing starts rose a stronger-than-expected 6.6 percent in April, data showed on Tuesday.
Rising home prices were also encouraging consumers to invest in their houses, Niblock added.
"The home improvement industry once again shows its resilient nature in an increasingly more difficult environment for retailers," Horvers wrote. Continued...