Global Warming Gives Lowe’s Earnings a Boost

Though a warmer than usual winter badly affected the sales of retailers selling apparel such as sweaters and jackets, it boosted sales of home improvement chain Lowe’s (NYSE:LOW). Consumers enjoyed the warmer weather and embarked on home renovations they would normally start in spring.

Earnings Report: Lowe’s Companies Inc. Earnings: Rise in Profit.

Sales for the fourth quarter rose 11 percent to $11.63 billion which beat estimates of $11.34 billion. Net earnings were higher at $322 million (26 cents a share) from $285 million (21 cents a share) in the previous year. Adjusted for items earnings per share was 24 cents, which was what analysts expected.

The company’s results have also benefited from a shift in marketing strategy that places more emphasis on lower every day prices compared to promotions. Other positive moves by Lowe’s include: using better signage and technology in its stores, an improved website, and more localized products.

Lowe’s is expected to do even better once the housing market recovers. Credit Suisse analyst Gary Balter said, “We encourage investors to look past the near term and think about double-digit margins for all when housing recovers.” Balter has an “outperform” rating on both Lowe’s and its rival Home Depot (NYSE:HD).

Here’s how LOW and HD are reacting to the earnings report:

Lowe’s Companies Inc. (NYSE:LOW): LOW shares recently traded at $27.98, up $0.82, or 3.02%. They have traded in a 52-week range of $18.07 to $28.46. Volume today was 6,287,908 shares versus a 3-month average volume of 15,779,000 shares. The company’s trailing P/E is 20.49, while trailing earnings are $1.37 per share.

The Home Depot, Inc. (NYSE:HD): HD shares recently traded at $47.02, up $0.04, or 0.09%. They have traded in a 52-week range of $28.13 to $48.07. Volume today was 1,522,626 shares versus a 3-month average volume of 10,321,700 shares. The company’s trailing P/E is 19.05, while trailing earnings are $2.47 per share.

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To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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