Why Lowe's Companies Inc. Soared Today

By Jeremy Bowman Markets Fool.com

What happened

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Shares ofLowe's Companies Inc(NYSE: LOW) were running higher today after the home-improvement retailer turned in a strong fourth-quarter earnings report. As of 10:53 a.m. EST, the stock was up 9.2%.

So what

The nation's No. 2 home-improvement retailer posted impressive comparable-sales growth of 5.1% in the recent quarter, its fastest mark in several periods. For years, Lowe's has lagged behind industry leaderHome Depotin the key metric, but narrowed the gap significantly in the fourth quarter.

Image source: Lowe's.

Overall revenue jumped 19.3%, to $15.78 billion, which topped Wall Street estimates at $15.39 billion, with most of the gains coming from its acquisition of Canada's Rona Inc last year. On the bottom line, adjusted earnings per share increased from $0.59 a year ago to $0.86, beating expectations at $0.79.

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CEO Robert Niblock said the company leveraged its "omni-channel platform, customer experience design capabilities, and project expertise" to deliver "strong results" in the quarter.

Now what

Investors were also encouraged by Lowe's upbeat guidance as the company projected comparable-sales growth of 3.5% in 2017, with management seeing a favorable macroeconomic environment for the home-improvement market.

Management also called for an overall revenue increase of 5% this year, and for earnings per share to hit $4.64, up from $3.99. Both targets were better than estimates, as analysts had expected revenue growth of 4.7% and EPS of $4.53.

Lowe's and Home Depot have been big winners during the economic recovery, with both stocks more than tripling during that time. That streak looks set to continue as long as the housing market keeps expanding, since both companies are protected from competitive forces, like e-commerce, that plague much of the retail sector.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Home Depot. The Motley Fool has a disclosure policy.