Lowe's Sees Signs of Home Improvement

(Updated with analyst commentary and stock price.)

MOORESVILLE, N.C. ( TheStreet) -- Lowe's ( LOW) posted a 30% tumble in its third-quarter earnings, but is seeing signs of lift in some of the hardest-hit housing markets.

During the quarter, the home improvement retailer earned $344 million, or 23 cents a share, compared with $488 million, or 33 cents, in the year-ago period.

Excluding costs related to store closures and pulling out of some future openings, as well as a tax benefit, Lowe's actually earned 24 cents, in line with analysts' estimates.

Revenue slipped 3% to $11.38 billion from $11.73, while same-store sales sank 7.5%.

"The broad-based pressures of the macro environment are clearly evident in our sales as consumers continue to delay large purchases until they feel better about the economic outlook," CEO Robert A. Niblock said in a statement.

But the company is starting to see improvement in some of the hardest-hit housing markets, including California, Florida and parts of the southwest.

For the fourth quarter, management expects earnings in the range of 9 cents to 13 cents a share, possibly beating the 10 cents Wall Street forecasts.

The company predicts a full-year profit between 1.16 to $1.20 per share, while analysts expect $1.20 per share.

"With the consumer showing signs of life in the more decorative and discretionary categories, we think this favors Lowe's over Home Depot," J.P. Morgan analyst Christopher Horvers wrote in a note.

Horvers expects Lowe's to get back the gross margin deterioration it saw in the fourth quarter last year due after resorting to markdowns.

And Wall Street Strategies analyst Brian Sozzi says Lowe's, from a valuation perspective, is valued at a discount to Home Depot. The stock is also discounted to its 10-year normalized averages, he wrote in a note.

Shares of the company are inching up 0.5% to $21.98 in early trading, while Home Depot is growing 2% to $27.91.

Home Depot ( HD) will release its quarterly results on Tuesday.

-- Reported by Jeanine Poggi in New York

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