"It's behind Home Depot, which has a bigger slice of market share," said Alastair McCaig, a market analyst at IG, based in London. "The fact that Lowe's has seen improvements is not completely surprising and we're looking for that to continue, assuming average earnings stay on track in the U.S."
Lowe's posted a 5.5% increase in fourth-quarter comparable-store sales in the U.S., compared to Home Depot's 8.9% increase. The Mooresville, N.C.-based home improvement retailer posted earnings per share of 59 cents, matching expectations. Revenue of $13.24 billion was 5.6% greater than the same quarter a year ago, and surpassed expectations of $13.07 billion.
"The do-it-yourself building and constructing side of improving properties is still quite prevalent in the U.S.," McCaig said. "In the aftermath of what had been an aggressive collapse of housing prices in the U.S., the ability to renovate yourself and add value is still attractive and Lowe's is benefitting off of that back of that."
Home prices have shown dramatic improvements from their post-crisis collapse. The S&P/Case-Shiller National U.S. Home Price index increased by 5.4% year over year, as of December, according to a report released Tuesday. The Case-Shiller index, which tracks prices in 20 metropolitan cities, has rebounded 36.3% since its March 2012 low.
McCaig also said that mild temperatures buoyed Lowe's sales, as consumers are more likely to make home improvements when the weather is warmer.
Lowe's shares lost 12.9% since the start of the year, compared to Home Depot's 6.7% decline. The broad S&P 500 fell 7% year to date.