Lowe’s Stock Jumps After Earnings Beat. It Raises Questions Over Home Depot.

Lowe’s reported adjusted earnings of $3.06 a share on revenue of $20.8 billion. Analysts ad expected $2.97 a share on $20.8 billion. (Spencer Platt/Getty Images)

Key Points

• Lowe’s exceeded third-quarter earnings expectations with $3.06 per share and $20.8 billion in revenue, driven by 0.4% comparable-store sales growth.
• Lowe’s updated its annual sales forecast to $86.0 billion but now expects comparable sales to be flat for the full year.
• Home Depot’s disappointing performance and reduced profit outlook were attributed to weather and ongoing weakness in home renovation projects.

Lowe’s shares were gaining Wednesday after it beat expectations for third-quarter earnings. The home improvement retailer’s report raises questions over the relatively disappointing performance of peer Home Depot .

Lowe’s reported adjusted earnings of $3.06 a share on revenue of $20.8 billion. Comparable-store sales rose 0.4%, driven by 11% online sales growth.

Analysts polled by FactSet had expected Lowe’s to post adjusted earnings of $2.97 a share on $20.8 billion in revenue. Same-store sales were projected to increase by 1% from a year ago.

“The company delivered another quarter of positive comp sales, and we’re pleased to start November with positive comps as well, despite headwinds related to hurricane activity in the prior year,” said CEO Marvin Ellison.

Lowe’s said it now expects annual sales of $86.0 billion, up from between $84.5 billion and $85.5 billion previously. However, it now forecasts comparable sales to be flat compared with the prior year, having previously given a range of between flat and up 1%.

The company forecast its full-year adjusted diluted earnings per share at approximately $12.25, narrowed from a range of $12.20 to $12.45 previously.

Lowe’s shares were up 5.2% in mid-morning trading Wednesday.

The performance could mean further questions for Home Depot, which reported results Tuesday and fell short of analysts’ expectations, cutting its profit outlook for the year. The question, as posed by Bernstein’s Zhihan Ma, is now “will LOW start outperforming HD?”

Home Depot cited two main reasons—the weather, and ongoing weakness in home renovation projects. Home Depot shares were down 0.9% Wednesday, after a 6% fall the previous day.

On the weather front, Home Depot CEO Ted Decker said the lack of hurricanes throughout the quarter had contributed to the company’s lackluster quarter. Over the third quarter of 2024, hurricane-fueled demand boosted home-improvement sales in affected regions. Lowe’s also lapped last year’s weather bump this quarter

More worrisome were Decker’s comments about the sector’s recovery. Home Depot had expected home improvement demand to improve in the second half of 2025, but it hasn’t so far. Consumers are still putting off big-ticket discretionary projects, Decker said, and concerns over affordability and the labor market are keeping Americans on the sidelines.

“We were expecting interest rates and mortgage rates to come down, which they did. That would have been some assistance to housing, but we really just saw ongoing consumer uncertainty and pressure in housing that are disproportionately impacting home improvement,” Decker said in an earnings call Tuesday.

Analysts will be tuning into Lowe’s earnings call, scheduled for 9 a.m. Eastern, to see what Ellison has to say about the consumer environment.

Home Depot’s slowdown wasn’t a complete surprise, wrote Bobby Griffin, an analyst at Raymond James. But the magnitude was likely “a little more than expected,” with executive commentary suggesting that consumers are only undertaking smaller, maintenance-oriented projects and staying in a “deferral mindset” when it comes to bigger renovations.

That sparked worries about Lowe’s’ earnings heading into the report, but the company’s better-than-expected results helped assuage some of those fears, wrote Jonathan Matuszewski, an analyst at Jefferies.

“Housing & labor market strains are deferring projects, but there’s no clear evidence that organic homeowner engagement is falling off a cliff,” he added.

Lowe’s derives about 70% of its revenue from do-it-yourself consumers and 30% from professional contractors, leaving it more vulnerable to the vicissitudes of the consumer environment. Home Depot’s business is split roughly in half between DIY and pro sales.

Under Ellison, Lowe’s has been trying to grow its exposure to the pro market. It recently acquired two companies that serve professional contractors, Artisan Design Group and Foundation Building Materials.

“This gives us a great opportunity to continue to drive share growth in small to medium Pro and serve our DIY customers well,” Ellison told Barron’s in September. “Concurrently, we have an opportunity to go after this larger Pro, which we think is going to pay off when the housing recovery happens.”

Write to Sabrina Escobar at sabrina.escobar@barrons.com