Investing.com -- Lowe's Companies, Inc. reported third-quarter earnings that surpassed analyst expectations, but its stock slipped over 4% following the results.
The company posted adjusted earnings per share of $2.89, beating the analyst estimate of $2.82. Revenue for the quarter came in at $20.2 billion, exceeding the consensus estimate of $19.93 billion. However, comparable sales decreased 1.1% YoY, reflecting continued softness in DIY bigger-ticket discretionary demand.
Lowe's (NYSE:LOW) updated its full-year 2024 guidance, now expecting total sales between $83.0 billion and $83.5 billion, up from its previous forecast of $82.7 billion to $83.2 billion. The company narrowed its adjusted earnings per share outlook to $11.80-$11.90, compared to the earlier range of $11.70-$11.90.
Marvin Ellison, Lowe's chairman, president and CEO, commented on the results: "Our results this quarter were modestly better-than-expected, even excluding storm-related activity, driven by high-single-digit positive comps in Pro, strong online sales and smaller-ticket outdoor DIY projects."
The company's performance was partly bolstered by storm-related sales, which helped offset weakness in other areas. Lowe's also reported positive comparable sales in its Pro segment and online business.
During the quarter, Lowe's repurchased approximately 2.9 million shares for $758 million and paid $654 million in dividends, demonstrating its commitment to shareholder returns.
As of November 1, 2024, Lowe's operated 1,747 stores with 195.0 million square feet of retail selling space.
"LOW cleared the comp hurdle, supported by +HSD pro growth, a hurricane tailwind and unseasonably warm/dry weather driving strength in smaller-ticket outdoor projects," said RBC capital analysts. "Similar to HD, however, the Company continued to see softness in larger ticket discretionary project demand, which limits visibility going forward. 2024 comp and EPS guidance coming up is, of course, good, but it's largely driven by an expectation for lower interest expense. The slightly lower margin outlook will likely be questioned."
Meanwhile, DA Davidson noted that even with a raised bar, "LOW cleared the hurdle and out comped HD for the first time since 2Q23, albeit by just 10 bps and with a much easier comparison." The firm added that it thinks "this report is good enough to hold recent gains."
Stifel says the results "stop short of validating the stronger growth embedded in FY25 consensus with the shares likely to trade sideways given [the company's] robust valuation."
Morgan Stanley (NYSE:MS) believes that the "Home Improvement recovery story [remains] intact," adding that there were "more signs of a bottom."