Lowe's bests Home Depot with an earnings beat, and growth of a key sales metric

By Tomi Kilgore

The home-improvement retailer's comparable-sales growth misses expectations but outpaced that of its rival, while profit beat expectations

Lowe's stock bounces after third-quarter sales of stores open more than a year rise more than expected, but also outpace those of rival Home Depot.

Shares of Lowe's Cos. bounced back nicely Wednesday, after the home-improvement retailer beat fiscal third-quarter profit expectations - something its key rival couldn't do.

And while Lowe's (LOW) reported growth in comparable sales, or sales of stores open at least 13 months, that missed Wall Street projections, they outpaced that of Home Depot Inc. (HD) for a second straight quarter. Comparable sales can be a better gauge of sales performance than net sales, which can increase if more stores are opened.

"The company delivered another quarter of positive comp sales, and we're pleased to start November with positive comps as well, despite headwinds related to hurricane activity in the prior year," said Chief Executive Marvin Ellison. Basically, the lack of storms this year relative to last year reduced demand for home improvement products, something Home Depot also cited for its sales miss.

Ellison noted on the post-earnings call with analysts, according to a FactSet transcript, that stubborn inflation and uncertainty about the strength of the economy has hurt consumer confidence, particularly when it comes to large purchases that people need to borrow to pay for, such as home renovations. On a bright note, Ellison said the overall U.S. homeowner if financially healthy, with record levels of home equity.

The stock climbed 5.3% in recent afternoon trading, after falling 6.7% amid a five-day losing streak to close Tuesday at a four-month low. That put it on track for the biggest one-day, post-earnings gain since it ran up 9.6% on Aug. 18, 2021, according to FactSet data.

In comparison, Home Depot shares fell 0.4% in recent Wednesday trading toward a 16-month low, and have dropped 10.5% amid a six-session losing streak.

Something Ellison touched on the call with analysts was that on average, homeowners had roughly $400,000 in home equity at their disposal. And since many remain reluctant to move, given that current mortgage rates may be a lot higher than what they are paying, homeowners are more likely to try invest in the home they already own.

So if interest rates start declining, as is expected, "including for home-equity loans," that could "spur demand" for renovations and provide a boost to the home improvement market.

For the quarter to Oct. 31, net earnings fell 4.7% from the same period a year ago to $1.62 billion, while adjusted earnings per share, which excludes nonrecurring items, grew 5.9% to $3.06, which was above the average analyst EPS estimate compiled by FactSet $2.97. That marked the 20th straight quarter that Lowe's beat on the bottom line, while Home Depot has missed profit expectations the past three quarters.

Comparable sales rose 0.4%, missing the FactSet consensus of a 1% rise. The growth was driven by an 11.4% jump in online sales growth and strength in home services and its Pro segment.

In contrast, chief rival Home Depot (HD) reported on Tuesday a quarterly profit that was below expectations, while lowering its full-year profit outlook. Its comparable sales grew just 0.2%, also missing forecasts.

Last quarter's results: Lowe's tops Home Depot with an $8.8 billion buyout deal and an earnings beat

Overall net sales were up 3.2% to $20.81 billion, just shy of the FactSet consensus of $20.82 billion.

Looking ahead, the company raised its full-year outlook for net sales to $86 billion from a previous range of $84.5 billion to $85.5 billion.

But the company also trimmed its outlook for comparable-sales growth to "flat" from previous guidance of flat to up 1%, and said it now targets adjusted EPS of $12.25 versus prior expectations of $12.20 to $12.45.

Lowe's stock has lost 6.3% in 2025, while Home Depot shares have shed 13.9% and the S&P 500 index SPX has advanced 12.8%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

11-19-25 1320ET