Lowe’s Cos is showing signs of a recovery in home improvement demand, with July sales strengthening and an $8.8 billion acquisition set to expand its reach in the professional contractor market.
Mizuho said Lowe’s (NYSE:LOW) July same-store sales growth of 4.7%, which is ahead of Home Depot’s 3.3%, was evidence of improving demand across core categories.
Overall second-quarter comparable sales rose 1.1%, supported by late-quarter seasonal strength and online growth.
Quarterly revenue rose 1.6% to about $24 billion, matching analyst estimates. Adjusted earnings of $4.33 a share topped Wall Street’s $4.24 forecast, while gross margins expanded by nearly 40 basis points on cost controls and better product mix.
The company also announced the purchase of Foundation Building Materials (NYSE:FBM) for $8.8 billion, adding more than 370 locations and about $6.5 billion in annualized revenue.
The deal cements Lowe’s position in the large, complex professional segment, giving it scale comparable to peers such as SRS Distribution, Mizuho said.
Lowe’s expects third-quarter comparable sales to grow between 0% and 2.5%. It raised full-year earnings guidance slightly to between $12.20 and $12.45 a share, and projected revenue of $84.5 billion to $85.5 billion.
Mizuho kept its Outperform rating on the stock, citing steady improvement in both DIY and professional sales and the long-term growth potential of the FBM acquisition.
Source :
https://www.investing.com/news/stock-market-news/has-home-improvement-finally-bottomed-4205436
