Why Is Lowe's (LOW) Up 8.4% Since Last Earnings Report?

Core Viewpoint - Lowe's has shown positive performance in its recent earnings report, with growth in both revenue and earnings, and is positioned for future expansion despite macroeconomic uncertainties [2][3][4]. Financial Performance - Lowe's reported adjusted earnings of $3.06 per share, exceeding the Zacks Consensus Estimate of $2.97, marking a 5.9% increase from $2.89 per share in the same period last year [4]. - Net sales reached $20,813 million, meeting consensus estimates and showing a slight increase from $20,170 million the previous year, driven by a 0.4% rise in comparable sales and significant growth in online sales (11.4%) and home services [5]. - The gross margin expanded to 34.2%, up 50 basis points year-over-year, while SG&A expenses increased to 20% of sales, leading to a decrease in operating income to $2,481 million from $2,536 million in the prior year [6]. Strategic Developments - The acquisition of Foundation Building Materials (FBM) is expected to enhance Lowe's reach in the Pro segment, contributing to long-term sales and profit improvement [3]. - Lowe's updated its full-year sales outlook to $86 billion, up from a previous range of $84.5-$85.5 billion, while projecting flat comparable sales and a slight decrease in adjusted operating margin expectations [9][10]. Financial Health - As of the end of the quarter, Lowe's had cash and cash equivalents of $621 million and long-term debt of $37,498 million, with a shareholders' deficit of $10,382 million [7]. - Operating cash flow for the nine months ended October 31 totaled $8,297 million, with $8.8 billion allocated for the FBM acquisition and $673 million paid in dividends during the quarter [7]. Market Position and Outlook - Lowe's has experienced a downward trend in estimates revision, with a consensus estimate shift of -5.91% [11]. - The company holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [13]. - In comparison, Home Depot, a competitor in the same industry, reported revenues of $41.35 billion with a year-over-year change of +2.8%, highlighting competitive dynamics within the retail home furnishings sector [14].