(Bloomberg) -- Lowe's Cos. proved once again that Americans' appetite to pour money into their homes hasn't abated.
The home-improvement chain's profit and sales topped analysts' projections in the fourth quarter, as did the Mooresville, North Carolina-based company's full-year forecast. That sent the shares up the most in almost eight years Wednesday.
Rival Home Depot Inc. posted results last week that also exceeded estimates and said it expected the U.S. home-improvement market to remain strong this year on higher property values. Rising prices drive consumers to spend on their homes because they view them as more of an investment, and they continued to rise last quarter. That helped Lowe's and Home Depot stand out during a largely dismal holiday season for the retail industry.
“We've entered 2017 well-positioned to capitalize on a favorable macroeconomic backdrop for home improvement,” Lowe's Chief Executive Officer Robert Niblock said in a statement.
Stock Soars
Lowe's shares rose as much as 11 percent to $82.85 in New York, the biggest intraday gain since May 2009. The stock had advanced 4.6 percent this year through Tuesday.
Fourth-quarter profit was 86 cents a share, excluding some items, exceeding the 79-cent average estimate seen by analysts. Sales jumped 19 percent to $15.8 billion, compared with projections for $15.4 billion. The company also released its first outlook for this year, forecasting earnings per share of $4.64 on sales growth of 5 percent. Analysts on average predict that profit will reach $4.52 a share and revenue will gain 4 percent to $67.7 billion.
Sales at U.S. Lowe's stores open a year or more rose 5.1 percent in the quarter, more than double analysts' 2.2 percent average prediction compiled by Consensus Metrix. Still, the company again failed to show as much growth as Home Depot, which posted an increase of 5.8 percent. Since 2009, Lowe's has only exceeded Home Depot twice in same-store sales, including the first quarter of this year.
Home price gains accelerated in the fourth quarter, rising 6.2 percent, according to the Federal Housing Finance Agency. Job growth is fueling demand in a market starving for listings. The number of previously owned homes available for sale at the end of December dropped 6.3 percent from a year earlier to 1.65 million, the fewest since the realtors group started tracking the data in 1999.
To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net.
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Lisa Wolfson, Kevin Orland
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