In August, Lowe’s reported lower than expected quarterly earnings and warned of slower growth in profit margins. Sruthi Ramakrisnan writing for Reuters noted the US housing market in general has soared, which should have translated for Lowe’s to earn more money. However, Lowe’s will spend more money on marketing and staffing to take advantage of a robust home improvement market.

Lowe’s biggest competition is Home Depot and Home Depot shares are up over 10% while Lowe’s are only slightly higher over the year. In the home renovation business there are two major markets – the do it yourself or the professional contractor. Lowe’s is trailing Home Depot in both. Going forward, Lowe’s intends to offer more promotions to woo professional contractors from Home Depot. Lowe’s is still a large company as their net income rose 21.4% to $1.42 billion or $1.68 a share. Lowe’s net sales climbed 6.8% to $19.50 billion.

Linking to dividend paying stocks, every company has a cycle and there is more home renovations in the spring and summer months. If you choose a retail stock you can go into your local company and check it out – how are they doing on sales? lots of people in the store and buying? How well the stock does is linked to the alternative. In this case Home Depot is the leader and even though Lowe’s increased net sales and net profits, Home Depot was doing better. There are always possiblities something can change.

There are more questions than answers, till the next time – to raising questions.