Home improvement retail giants Home Depot and Lowe's have reported better-than-expected fourth-quarter financial results, showcasing resilience in a challenging housing market characterized by high mortgage rates and cautious consumer spending.
Home Depot (NYSE: HD) posted earnings of $2.72 per share on revenue of $38.20 billion for Q4, surpassing analyst consensus estimates of $2.54 per share and $38.12 billion. The company reaffirmed its guidance for 2026, projecting total sales growth of 3.5% and a 2% gain in earnings per share (EPS) compared to 2025. Following the earnings release, Home Depot's stock is up approximately 12% year-to-date. The company also announced a 1.3% increase in its quarterly dividend to $2.33 per share, marking its 37th consecutive year of dividend payments.
Famed investor and CNBC's Mad Money host Jim Cramer expressed bullish sentiment on Home Depot, attributing his optimism to recent mortgage rates dipping below 6% for the first time since 2022. Cramer stated this drop represents the "big spur" for the company, potentially unlocking the value of its significant investment in the "Pro" business targeting professional contractors. He praised the company's strong margins as proof of its ability to withstand tariff uncertainty and competition. However, Cramer advised investors not to chase the post-earnings surge and to wait for a pullback before initiating new positions.
Lowe's (NYSE: LOW) followed with its own Q4 beat, reporting adjusted earnings per share of $1.98 on revenue of $20.58 billion, exceeding forecasts of $1.94 EPS and $20.34 billion revenue. Comparable sales grew 1.3%, well above the 0.2% expectation. However, net income declined to $999 million ($1.78 per share) from $1.13 billion ($1.99 per share) a year earlier.
The market reaction was mixed due to Lowe's full-year guidance. The company projected fiscal year sales between $92 billion and $94 billion (representing 7% to 9% growth) but forecast adjusted EPS in the range of $12.25 to $12.75, below the analyst consensus of $12.95. This softer guidance weighed on the stock in premarket trading.
CEO Marvin Ellison emphasized the company's focus on productivity initiatives and executing within its control, noting that its strategy is resonating with both DIY customers and professional contractors. Lowe's has aggressively expanded its professional services through acquisitions, including Foundation Building Materials for about $8.8 billion and Artisan Design Group for roughly $1.33 billion.
The broader industry backdrop remains pressured. Demand for major home improvement projects is subdued as consumers grapple with high borrowing costs, elevated housing prices, and economic uncertainty. Both retailers are increasingly leaning into serving professional contractors, who provide more consistent demand than individual homeowners. Cramer, while acknowledging Home Depot's strength, maintained his preference for Lowe's, stating on Squawk on the Street that Lowe's has "done a better job" in recent years and possesses an "outstanding" business-to-consumer model.
