Lowe's Companies (LOW) stock is higher Wednesday after the world’s second-largest home improvement retailer beat top- and bottom-line expectations for its fourth quarter and provided a positive revenue outlook for 2025.
In the three months ending January 31, Lowe's revenue decreased 0.3% year over year to $18.6 billion. Its earnings per share (EPS) rose 9% from the year-ago period to $1.93.
"Our results this quarter were once again better than expected, as we continue to gain traction with our Total Home strategic initiatives," said Lowe's CEO Marvin Ellison in a statement. "We remain confident in the long-term strength of the home improvement industry, and we are equally confident in our strategy to capitalize on the expected recovery."
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The results beat analysts' expectations. Wall Street was anticipating revenue of $18.3 billion and earnings of $1.84 per share, according to CNBC.
Lowe's also said its comparable-store sales rose 0.2% in the fourth quarter, "driven by high-single-digit Pro and online comparable sales, strong holiday performance, and rebuilding efforts in the wake of recent hurricanes."
"I think the market underestimated comp sales' return to positive territory this morning, showcasing strong outperformance vs the midpoint of guidance that was underwritten by analyst expectations," says David Wagner, head of equity and portfolio manager at Aptus Capital Advisor.
Wagner adds that everyone is trying to gauge the health of the consumer from recent retail earnings, "but everything continues to point to the consumer remaining very healthy and resilient."
For the full fiscal year, Lowe's said it expects to achieve revenue in the range of $83.5 billion to $84.5 billion, comparable-store sales of flat to up 1% from 2024 and earnings between $12.15 to $12.40 per share. The midpoint of its revenue guidance, $84 billion, would represent positive growth from the $83.7 billion it generated in 2024.
Is Lowe's stock a buy, sell or hold?
Lowe's has lagged the broader market over the past 12 months, up 6.2% on a total return basis (price change plus dividends) through the February 25 close vs the S&P 500's 18.6% gain. But Wall Street sees value in the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for LOW is $282.68, representing implied upside of nearly 15% to current levels. Meanwhile, the consensus recommendation on the blue chip stock is a Buy.
Financial services firm Truist Securities maintained its Buy rating after earnings, along with its $308 price target.
"While the 2025 earnings guide is slightly below (similar to Home Depot), we think the positive comparable-store sales inflection is the key to the story and that the natural aging/maintenance demand cycle is reasserting itself," says Truist Securities analyst Scott Ciccarelli.
The analyst adds that there could be upside potential if or when folks "start to tap their home equity pools for remodeling and improvement activity (especially if rates start to fall)."
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