This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Lowe's Never Stops Improving

I'm not going to blow one quarter out of proportion. But the first takeaway was that Lowe's outgrew Home Depot this quarter. It also says that the steps that management has taken to improve operational efficiency are beginning to pay dividends.

And as evidenced by the 9.6% growth in same-store sales (or comps), which tracks the performances of stores that have been opened at least one year, there's no denying that Lowe's has found a solution to its merchandising and cost-management deficits.

Although I had little doubt that Lowe's would eventually get its house in order, weak merchandising and a feeble cost structure had eroded Lowe's foundation, which led customers to Home Depot instead.

That the company has now produced its best comp growth in a decade, I have to credit management It's been an extremely difficult environment, especially given the weak comps that we've seen from the likes of Wal-Mart (WMT - Get Report) (1% growth).

[READ: <a target="BLANK" data-add-tracking="TRUE" href=""><em>Why Microsoft's Decision to Buy Nokia Is Bad</em></a>]

Although it may sound like it, I'm not here boasting about my confidence in Lowe's. Well, maybe a little. But it's not hard to like a company that has put together the string of profitability that this company has. Even though Lowe's had struggled with growth and some operational deficits, the company had never showed signs that its cash registers were not ringing.

And that gross margins advanced this quarter by 42 basis points also suggests exceptional cost controls, which is not easy to achieve, by the way. So even though the company added to its workforce, while also extending employee work hours, management still figured out ways to boost operating income by 25%, demonstrating strong signs of efficiency.

Unlike some recent quarters, there were no noticeable weaknesses this time in Lowe's that Home Depot could exploit.

[READ: <a target="BLANK" data-add-tracking="TRUE" href=""><em>'My Biggest Work Mistake': 7 Career Confessions</em></a>]

To be fair, given Home Depot's likewise solid results, I don't believe that this is a situation where Lowe's is stealing market share from Home Depot. Given what I've seen from lumber manufactures such as Weyerhaeuser (WY - Get Report) and Louisiana Pacific (LPX - Get Report), I more or less believe that the U.S. housing recovery has much more to do with the better-than-expected results.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HD $133.89 0.00%
LOW $76.02 0.00%
LPX $17.00 0.00%
WMT $66.87 0.00%
WY $32.12 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs