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Lowe's Beats Earnings Forecast on Stimulus, Home Improvement Demand

CEO Marvin Ellison said he was "confident in our ability to accelerate our market share gains" after Lowe's posted better-than-expected first quarter earnings Wednesday.

Lowe's Companies  (LOW) - Get Lowe's Companies Inc. Report posted stronger-than-expected first quarter earnings Wednesday, following on from its larger rival Home Depot  (HD) - Get Home Depot Inc. (The) Report, as government stimulus and home improvement demand boosted the group's top and bottom lines.

Lowe's said adjusted earnings for the three months ending on May 1 were pegged at $3.21 per share, an 82% increase from the same period last year and firmly ahead of the Street consensus forecast of $2.62 per share. Group revenues, Lowe's said, rose 24% to $24.4 billion, topping analysts' estimates of a $23.8 billion tally.

Same store sales, Lowe's said, rose 25.9% from last year, Lowe's said, again beating the Refintiv forecast of 19.2%.

"Our outstanding performance continued this quarter, as we delivered strong sales growth and operating margin expansion. We delivered over 30% growth in Pro, over 18% growth in all 15 U.S. regions, and growth in Canada that outpaced the U.S.," said CEO Marvin Ellison. "I would like to thank our front-line associates for their hard work and commitment to delivering exceptional customer service. Looking forward, I remain confident in our ability to accelerate our market share gains while driving further improvement in operating margin."  

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Lowe's shares were marked 1.65% lower in ealry trading immediately following the earnings release, compared to a 1.5% decline for the S&P 500, to change hands at $189.40 each, a move that would trim the stock's year-to-date gain to around 17%. 

Home Depot posted stronger-than-expected first quarter earnings yesterday amid what the world's biggest home retailer called "unprecedented" demand for domestic projects. 

Shares in the group slipped lower, however, following a weaker-than-expected reading of April housing starts and concerns that near record-high lumber prices could erode the group's profit margins in the current quarter.