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Home Depot (HD) vs. Lowe's (LOW): Which Company Posted Better Q1 Earnings?

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The first quarter earnings season is coming to a close. Despite more and more Washington D.C. turmoil, the bull market keeps raging on with Q1 earnings growth reaching some of the highest levels investors have seen in five years.

However, the retail sector faced another tough quarter as e-commerce giant Amazon (AMZN) keeps expanding its reach. Once-powerful clothing retailers Macy’s (M - Free Report) and J. C. Penney (JCP - Free Report) posted rough quarters that caused their stock prices to fall. Dick’s Sporting Goods (DKS - Free Report) had recovered well over the last few years, until it plummeted after a less than impressive first quarter.

Overall, the SPDR S&P Retail ETF (XRT - Free Report) and the PowerShares Dynamic Retail Portfolio ETF (PMR - Free Report) suffered thanks to weakness throughout the industry.

And yet, there were some signs of life. Two of the biggest retail players, Walmart (WMT - Free Report) and Target (TGT - Free Report) , both posted solid earnings. Another big-box giant, Home Depot (HD - Free Report) , also reported strong earnings and guidance.

With fellow home improvement retailer Lowe’s (LOW - Free Report) reporting its earnings on Wednesday, let’s take a look at which company performed better in the first quarter, and how each is positioned long-term.

Home Depot

The world's largest home improvement retailer beat the Zacks Consensus Estimate for both earnings and revenue in the first quarter. On May 16, Home Depot topped our revenue projection by $142 million, posting sales of $23.9 billion—up 4.9% year-over-year. The company reported $2 billion in net earnings. Comparable store sales were up 5.5%, and they jumped 6% at U.S.-based locations.

Home Depot raised its earnings per share guidance to $7.15 from $7.13 in 2017, which represents an 11% increase year-over-year. The company reaffirmed its expected 4.6% increase in fiscal 2017 sales.


Lowe's reported on Wednesday its first quarter results. The second largest home improvement store missed both Zacks Consensus Estimates. Lowe’s posted earnings of $1.03 per share, below our estimate of $1.07; the company’s revenue of $16.86 billion also came in short of our consensus estimate of $17.04 billion. Still, Lowe’s first quarter sales increased by 10.7% year-over-year.

The company posted a pre-tax loss of $464 million, due in part to a large debt repayment. Lowe's first quarter comparable sales increased 1.9% overall, while U.S.-based same-store sales rose 2%.

Lowe's reaffirmed its full-year 2017 outlook. The company’s total sales are expected to jump by roughly 5%, while comparable sales are expected to increase around 3.5%. Lowe's also plans to add as many as 35 new stores this year.

Who did it better?

Home Depot is currently a Zacks Rank #3 (Hold), yet the company earned an A growth grade in our Style Scores system. Following its impressive earnings report, the stock is sitting comfortably near its all-time high.

Shares of Lowe's have climbed pretty steadily over the last decade, but the stock is down 2.81% in afternoon trading on Wednesday. Lowe’s also currently holds a Zacks Rank #3 (Hold).

The DIY home improvement market seems to be relatively unaffected as online companies squeeze many other retail sectors. Lowe’s plans to spur 2017 growth by adding more stores, while Home Depot seems to be committed to focusing on improving its current locations.

Nevertheless, we have to declare a winner here, and based on their latest earnings results, the nod goes to Home Depot. Lowe’s is a solid company, but the edge, for now, remains in Home Depot’s favor.

If you want to know more about Home Depot read here: Here Are 5 Fun Facts About Home Depot

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