Lowe's (LOW) up strong in the premarket on strong earnings

Posted Aug 20th 2007 9:00AM by Michael Fowlkes
Filed under: Before the Bell, Major Movement, Earnings Reports, Good news, Consumer Experience, Competitive Strategy, Home Depot (HD), Lowe's Cos (LOW), Housing

Home improvement chain Lowe's Cos. (NYSE: LOW) is moving sharply higher in today's premarket following the release of strong second quarter earnings. Boosted by higher revenues, the North Carolina company reported a 9% jump in quarterly profits.

The company earnings of 67 cents per share, a nice upside surprise from the 61 cents analysts had expected. This was all the bulls needed to push the stock higher. So far this morning, shares of Lowe's are up 6.1%, looking to open up $1.63.

Not surprisingly, the company did have one weakness, and that was sales from stores open a year or more, which was directly related to the slowdown in the housing market. Analysts had factored that in already, and the actual decline was "only" 2.6%.

While a 2.6% fall in same store sales is nothing that any company wants to have to experience, things could have been a lot worse considering the state of the housing market lately. Remember that last week the company's #1 competitor, Home Depot Inc. (NYSE: HD), announced that it had a 5.2% decline in its same store sales.

According to a report on Bloomberg, Lowe's is being successful in taking customers away from Home Depot due to better customer service, and newer stores with better lighting and wider aisles.

All in all, a great quarter for Lowe's! Look for strong gains in today's market for this one, it has really been in need of some good news lately to help reverse its recent downward trend. We will close with a 52-week chart on the stock to see just how hard the weakening housing market has impacted this stock:

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

Tags: home building, Home Depot, home improvement, home sales, HomeBuilding, HomeDepot, HomeImprovement, HomeSales, housing market, housing slowdown, HousingMarket, HousingSlowdown, inthenews, Lowe's

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Reader Comments (Page 1 of 1)

8-20-2007 @ 3:44PM

haveittodayray said...

I would agree with your assessment of Lowe's. It is the stock to own for long term and it is a "buy" at this low price. Would expect a rise to the high 30's
or even the 40 range before 2008. Do your own research. They are rapidly gaining market share, in what was Home Depot's turf, ie. Canada and the huge West Coast. The new CEO of Home Depot, simply cannot compete with this company. Also,take a serious look at the potential for a split in late 2008 or early 2009 based upon the company history. Those that get in now for long term will be rewarded.
Cleaner, brighter, well merchandised stores and in compliance with Sarbanes Oxley on a daily basis makes this company the one to own.

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