Core Viewpoint - Both Home Depot (HD) and Lowe's (LOW) have shown positive year-over-year comparable sales growth for the first time in eight periods, indicating a potential recovery in the home improvement market [3][4][17]. Group 1: Quarterly Results - Home Depot's comparable store sales increased by 0.8% year-over-year, with U.S. comparable sales rising by 1.3% [4]. - Lowe's comparable store sales rose by 0.2% year-over-year, surpassing the consensus estimate of a -1.4% decline [5][4]. - Both companies have reported their second consecutive positive readings on comparable sales, suggesting improving performance in existing locations [8][4]. Group 2: Valuation - Lowe's shares are trading at a lower forward 12-month earnings multiple compared to Home Depot, with a significantly lower PEG ratio [10]. - Lowe's is projected to achieve a 4.3% year-over-year EPS growth this fiscal year, while Home Depot is expected to see only 1.6% growth [10]. - Given the current PEG ratios, Lowe's valuation appears more attractive [10]. Group 3: Estimate Revisions - Analysts have revised EPS expectations more negatively for Home Depot compared to Lowe's following the latest earnings releases [12][16]. - The stability in Lowe's earnings picture is viewed positively, while the downward revisions for Home Depot raise concerns [16]. - Top line revisions for both companies' upcoming earnings reports have been marginally positive [16]. Group 4: Overall Outlook - Despite near-term uncertainties in the home improvement market, the positive change in comparable sales for both companies suggests potential momentum [17]. - Lowe's shares are currently considered the better investment based on valuation, forecasted EPS growth, and a more favorable earnings outlook following recent results [18].

Core Insights - Lowe's and Home Depot have reported a return to comparable store growth in Q4 2024, marking the first positive growth in over a year, indicating end-market strength and operational efficiencies [1][4][8] - Organic growth is expected to continue into 2025, supported by increased store counts, enhancing shareholder value and capital returns [2][12] Financial Performance - Lowe's net revenue for Q4 was $18.55 billion, a decrease of 0.3% year-over-year, but $0.26 billion better than analyst consensus [5] - The company experienced gross margin pressure but improved operational efficiencies led to an 80 basis-point increase in operating margin and a 58-point increase in net margin [6] - Earnings increased by $0.15 or 840 basis points annually, outperforming adjusted expectations by 500 basis points, providing strong cash flow for debt reduction and shareholder returns [7] Market Outlook - Guidance for 2025 indicates continued growth, including comparable store growth, although less than analysts' predictions, which has created a buying opportunity in the market [8] - Analysts maintain a bullish outlook for Lowe's stock, with price targets ranging from $282 to $305, indicating potential upside of 7% to 17% [12][14] Capital Management - The company has reduced its share count by 2.7% in 2024 through a slower pace of buybacks, allowing for significant debt reduction [11] - The dividend remains safe and reliable, expected to grow annually, with a payout ratio under 40% of earnings [11] Technical Analysis - The stock market showed a favorable technical action with a 3.5% rise in premarket trading, confirming support at critical levels and aligning with an uptrend [13] - Institutional buying activity has reached multi-year highs, indicating strong demand for Lowe's stock ahead of earnings releases [14]

Financial Data and Key Metrics Changes - Fourth quarter sales at comparable stores decreased by 5.8%, primarily due to lower store traffic, partially offset by a modest improvement in average order value [16][37] - For the year, sales at comparable stores decreased by 7.8%, attributed to softer store traffic influenced by elevated interest rates affecting existing home sales and demand for home improvement projects [37] - Gross margin rate decreased by 50 basis points to 64.2% in Q4 2024, due to elevated inventory write-offs from product transitions, though partially offset by efforts to source products at lower price points [18][38] - For the year, gross margin rate improved by 130 basis points to 65.7%, driven by stabilizing international freight rates and reduced inventory purchasing costs [39] Business Line Data and Key Metrics Changes - Sales volumes of the Superior product line improved in Q4 2024, following the relaunch of the private label Superior line of installation products in June [10][31] - Despite year-over-year declines in tile volumes sold, growth in Superior volumes was noted during the second half of 2024, providing a tailwind for future growth [12][32] - The company is expanding its selection of entry-level competitively priced products to attract a wider customer base, particularly those on a budget [13][32] Market Data and Key Metrics Changes - Existing home sales levels remain near historic lows, impacting demand for home improvement projects [7][28] - The company anticipates that the changing political landscape and new policies will affect tariffs, consumer sentiment, and jobs, which are critical for housing turnover and remodeling activity [7][28] Company Strategy and Development Direction - The company plans to be selective with incremental investments in 2025 and does not intend to open new stores, instead focusing on closing two unprofitable stores [9][30] - The strategy includes curating a strong assortment of tile products and providing exceptional service to differentiate from competitors [14][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges in the industry but remains optimistic about a potential recovery in housing turnover and remodeling demand [7][28] - The company ended the year with no debt and $21 million in cash, positioning itself strongly to navigate current challenges [8][29] Other Important Information - SG&A expenses decreased by $1.3 million in Q4 2024 compared to the previous year, with a total annual decrease of $2.5 million [19][40] - Operating cash flow for 2024 was $27.1 million, contributing to an increase in cash balance of over $12 million during the year [21][41] Q&A Session Summary Question: No questions were raised during the session - The operator noted that there were no questions at this time, and the call was turned back to Mark Davis for closing remarks [44]

New funding expands foundation's roster of funded partners to 52 organizations offering scalable training programs in dozens of states MOORESVILLE, N.C., Feb. 27, 2025 /PRNewswire/ -- The Lowe's Foundation today announced nearly $9 million in Gable Grants to strengthen 15 nonprofits on the front lines of a growing skilled trades workforce movement. From Alaska to Mississippi, each organization is helping prepare new tradespeople as rising wages fuel more career opportunities. Over the past 12 months in cons ...

Retail Sector Performance - The recent earnings focus has been on the Retail sector, with big-box operators like Walmart and Home Depot reporting quarterly results [2] - Walmart's shares declined post-earnings due to disappointing guidance, despite solid results and continued market share gains [3] - Home Depot's shares increased after reporting better-than-expected comparable sales, marking a positive turnaround after eight consecutive quarters of declines [4] Earnings Trends - Over 90% of S&P 500 companies have reported earnings, showing a notable growth trend with total earnings up +13.6% year-over-year and revenues up +5.5% [7] - In the Retail sector, earnings for companies reporting are up +32.3% year-over-year, with 72% beating EPS and revenue estimates [7] - Excluding Amazon, the Retail sector's earnings growth adjusts to +4.6% and revenue growth to +5.4% [7] Tech Sector Outlook - The Tech sector is expected to see earnings growth of +24.6% in Q4, continuing a trend of double-digit growth for six consecutive quarters [9][10] - Despite a strong outlook, recent data indicates a shift in earnings estimate revisions for the Tech sector [11] Future Earnings Expectations - Total S&P 500 earnings for Q1 2025 are expected to increase by +6.5% year-over-year, although estimates have been declining since the quarter began [14] - A broad-based revision trend shows cuts in estimates across 15 of 16 sectors, with the Tech sector also experiencing downward pressure [17] - The expectation for 2025 is nearly all sectors to enjoy earnings growth, with seven sectors projected to achieve double-digit growth [19]

Core Viewpoint - Home Depot remains a strong dividend stock despite facing challenges in the current macroeconomic environment, with a long-term investment thesis intact [2][5][10]. Company Performance - Home Depot's market capitalization has increased from approximately $50 billion 15 years ago to over $380 billion today, indicating strong stock performance [2]. - In fiscal 2023, comparable sales fell by 3.5% and diluted EPS decreased by 9.5%, reflecting a multiyear downturn [4]. - The company's stock has increased by around 11% over the last three years and 57% over the last five years, although it is underperforming compared to the S&P 500 [5]. Macroeconomic Challenges - High interest rates are making home improvement financing more expensive, while elevated mortgage rates are discouraging home purchases [7]. - Existing home sales in the U.S. are near a 10-year low, down approximately 20% from pre-pandemic levels, indicating a strained housing market [8]. - The Case-Shiller Home Price Index is at a 10-year high, contributing to affordability issues for potential homebuyers [7][8]. Dividend Growth - Home Depot has consistently raised its quarterly dividend from $0.25 per share in 2011 to $2.25 per share in 2024, showcasing a commitment to dividend growth [11]. - The company has a dividend yield of 2.3%, making it an attractive option for passive income investors [12]. Valuation and Future Outlook - Home Depot's current price-to-earnings (P/E) ratio is 26.2, with a forward P/E of 24.5, indicating a reasonable valuation despite appearing slightly overvalued [14]. - The acquisition of SRS Distribution for $18.25 billion is expected to enhance Home Depot's exposure to the contractor market, although the full benefits may take time to materialize due to industry slowdowns [15][16]. - Fiscal 2025 may see a slight uptick in sales and earnings post-integration of SRS, even if interest rates remain high [17].

Core Insights - Lowe's is strategically investing in digital and in-store offerings to enhance value and convenience for Pro customers, driving growth amid a challenging macroeconomic landscape [1] - The company reported high single-digit growth in the Pro segment and a 9.5% increase in online sales during the fourth quarter, with a 0.2% rise in comparable store sales, marking the first positive increase in two years [2] Pro Customer Momentum and Loyalty Programs - Lowe's is gaining momentum with Pro customers and has updated its MVPs Pro Rewards & Partnership Program to MyLowe's Pro Rewards, allowing members to earn points on purchases redeemable for rewards [3] - The DIY loyalty program has 30 million members, with members outspending non-members by 50% [4] Driving Growth Through Productivity Improvement - Lowe's future growth strategy includes Perpetual Productivity Improvement (PPI) initiatives, which now extend to supply chain, merchandising, HR, IT, and online operations, focusing on store front-end transformation [5] Targeting Millennials and Strengthening Digital Experience - Millennials are leading in home improvement retail, with 25% having purchased building materials or tools in the past 30 days, compared to 19% of consumers overall [7] - Lowe's launched a Digital Home Platform for MyLowe's Rewards members, providing personalized home maintenance management and product recommendations [8] Looking Ahead - The company is prepared to outperform the market in various macro scenarios, leveraging data from loyalty programs to drive engagement and offering exclusive deals [10] - The normalization of the home improvement market remains uncertain, with a focus on tracking discretionary big-ticket items for DIY and the home installation business [11]

Core Insights - Lowe's Companies, Inc. reported fourth-quarter fiscal 2024 results with both net sales and earnings exceeding the Zacks Consensus Estimate, marking an improvement in earnings year over year despite a slight decline in net sales [1][2][3] Financial Performance - Adjusted quarterly earnings were $1.93 per share, surpassing the Zacks Consensus Estimate of $1.83 and improving from $1.77 in the same period last year [2] - Net sales reached $18,553 million, exceeding the Zacks Consensus Estimate of $18,346 million but reflecting a 0.3% year-over-year decline [3] - Comparable sales increased by 0.2%, a recovery from the 1.1% decline in the previous quarter, driven by high-single-digit growth in Pro and online sales, strong holiday performance, and post-hurricane rebuilding efforts [4] Profitability Metrics - Gross profit rose by 1.2% year over year to $6,097 million, with gross margin expanding by 50 basis points to 32.9% [5] - Operating income increased by 8.5% to $1,830 million, and operating margin expanded by 80 basis points to 9.9% [5] Financial Health - The company ended the quarter with cash and cash equivalents of $1,761 million and long-term debt of $32,901 million [6] - For fiscal 2024, Lowe's generated cash flow from operations of $9,625 million and executed a buyback of approximately 5.5 million shares, totaling $1.4 billion [6] Fiscal 2025 Outlook - Lowe's anticipates total sales between $83.5 billion and $84.5 billion for fiscal 2025, with comparable sales expected to be flat to up 1% [7] - Adjusted earnings per share are projected in the range of $12.15 to $12.40, with capital expenditures estimated at approximately $2.5 billion [8] Stock Performance - Lowe's shares have increased by 1.3% over the past six months, compared to the industry's growth of 3.2% [9]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported sales of $18.6 billion with positive comparable sales growth of 0.2% [6][55] - For the full fiscal year 2024, total sales reached $83.7 billion, with an adjusted operating margin of 12.3% and adjusted earnings per share of $11.99 [6][55] - The gross margin for Q4 was 32.9%, an increase of 46 basis points year-over-year, driven by productivity initiatives [57] - Adjusted SG&A expenses were 21% of sales, reflecting an 8 basis point deleverage compared to the previous year [57] - The company generated $7.7 billion in free cash flow and returned $6.5 billion to shareholders through share repurchases and dividends in 2024 [58] Business Line Data and Key Metrics Changes - The pro segment experienced high single-digit comparable sales growth for the second consecutive quarter, driven by the TransformPro offering and improved service levels [8][22] - Online sales grew by 9.5% in Q4, with significant sales during Black Friday and Cyber Monday [9][10] - The DIY segment faced pressure, particularly in larger ticket discretionary spending, with comparable transactions declining by 1.3% [55][56] Market Data and Key Metrics Changes - The company noted a cautious consumer environment impacting DIY discretionary spending, especially for larger projects [7][13] - The macro environment remains challenging, with high mortgage rates leading to a lock-in effect and the lowest pace of existing home sales in nearly 30 years [13][14] - Despite these challenges, key drivers such as home price appreciation and disposable income growth are expected to sustain long-term demand [14][15] Company Strategy and Development Direction - The company is focused on a total home strategy, which includes driving pro penetration, accelerating online sales, and expanding home services [16][17] - Investments are being made in technology-driven productivity projects and key growth initiatives, with a disciplined focus on productivity [59][63] - The company plans to open five to ten new stores in 2025 as part of its growth strategy [64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the medium to long-term outlook despite near-term market uncertainties [14][62] - The company anticipates a flat home improvement market in 2025, with pro outpacing DIY due to repair and maintenance needs [62][63] - Management highlighted the importance of agility and strategic planning to outperform the market under various economic scenarios [17][90] Other Important Information - The company awarded $80 million in discretionary bonuses to frontline associates, reflecting appreciation for their commitment [20][51] - Lowe's donated $2 million for relief efforts in communities affected by wildfires in Southern California [19][38] Q&A Session Summary Question: Discussion on Q4 strength and context - Management acknowledged the challenging macro backdrop but expressed satisfaction with execution and positive comps despite market difficulties [72][74] Question: Gross margin expectations and vendor clawbacks - Management indicated that gross margin is expected to remain flat for the year, with PPI initiatives offsetting pressures from investments [78][80] Question: Sales guidance and market share - Management confirmed that the sales guidance remains consistent with previous expectations, factoring in weather impacts and market conditions [88][90] Question: Hurricane rebuild outlook - Management adopted a conservative approach regarding the financial benefits from hurricane rebuilds, considering timing of insurance proceeds [100] Question: Pro segment engagement and performance - Management reported positive growth across pro-centric categories, driven by improved service levels and inventory availability [107] Question: Transaction versus ticket growth expectations - Management expects slight ticket growth driven by pro strength, while DIY traffic pressures are anticipated to persist [113][115] Question: Large ticket remodeling categories performance - Management acknowledged that DIY discretionary big ticket categories are under pressure, impacting overall revenue [130][132] Question: Incremental activity to drive DIY business - Management stated there are no plans for significant changes in promotional cadence for DIY, focusing instead on leveraging the DIY loyalty program [135][137]

Market Overview - Pre-market futures show positive movement with the Dow up +126 points, S&P 500 up +33 points, Nasdaq up +178 points, and Russell 2000 up +10 points [1] - Over the past five trading days, the Dow is down -1.8%, S&P 500 down -2.3%, Nasdaq down -3.8%, and Russell 2000 down -4.0% [1] - All indexes are still up year-to-date except for the Russell 2000, with the Nasdaq barely maintaining its gains [1] Economic Indicators - Key Q4 earnings reports are anticipated, but no major economic reports are expected until New Home Sales for January are released at 10am ET [2] - New Home Sales are projected to reach 671K, lower than December's 698K but an improvement from the 12-month low of 615K in October [3] - The last time new home sales exceeded 1 million was in October 2020 [3] Company Earnings Reports - NVIDIA is set to report Q4 earnings with estimates indicating +60% growth in earnings and +70% growth in revenues, reflecting its significant market cap of $3 trillion [4] - Salesforce is expected to report Q4 results with +13.5% earnings growth and +8% revenue growth, following a rare earnings miss last quarter [5] - The TJX Companies reported Q4 earnings of $1.23 per share, beating expectations of $1.16, with revenues of $16.35 billion surpassing projections [6] - Lowe's reported earnings of $1.93 per share, exceeding consensus estimates, and revenues of $18.55 billion, outperforming expectations by +1.13% [7] - Anheuser-Busch InBev reported earnings of 88 cents per share, significantly above expectations of 72 cents, with revenues of $14.84 billion, exceeding projections by +2.5% [8]