Lowe's hiked its outlook for 2022 after archrival Home Depot gave conservative guidance. Lowe's joined Home Depot, Louisiana-Pacific and Boise Cascade with better-than-expected fourth-quarter earnings, giving investors a look at both ends of the lumber supply chain. Boise Cascade stock joined Home Depot stock's plunge, as outlooks weighed.
Lumber prices have swung wild in the past two years and are now rebounding. Current prices are about three times their pre-pandemic levels, but about 20% below their record high from May last year.
Boise Cascade's 2021 results benefited from "historically high" commodity wood products pricing, the company said in a release late Tuesday. But looking forward, Boise Cascade warned that it expects commodity product pricing and commodity input costs to be volatile.
Boise Cascade Stock, Lumber Stocks
Boise Cascade stock dived past Home Depot stock, tanking 21% to 64.71 Wednesday. The stock triggered multiple sell signals, undercutting the 50-day moving average in heavy volume, erasing a double-digit gain above 71.90 cup-with-handle buy point, and diving more than 8% below that buy point.
Late Tuesday, Boise Cascade reported earnings surged 142% to $4.26 per share. Revenue grew 21% to $1.782 billion. Analysts expected EPS of $2.32 on sales of $1.579 billion.
"Our 2021 results were favorably impacted by historically high commodity wood products pricing, as well as rising prices for EWP (engineered wood products) and general line products," the company said in a release. In 2022, Boise Cascade warned that it expects future commodity product pricing to be volatile, while expecting the "firm" pricing environment for its finished products to continue.
Louisiana-Pacific stock tumbled 7.5% to 62.88 Wednesday as Boise Cascade sank. LPX stock, which had been building the right side of a base, undercut its 200-day average.
Early Tuesday, Louisiana-Pacific disclosed an 11% EPS increase to $2.24. Revenue jumped 15% to $992 million. Analysts were expecting EPS of $1.99 on revenue of $912.7 million.
Louisiana-Pacific and Boise Cascade produce engineered wood products and plywood products for the home construction and building markets. In this young year, lumber stocks are outperforming home improvement retailers as lumber prices soar.
Lowe's Stock, Home Improvement Giants
Early Wednesday, Lowe's reported earnings grew 34% to $1.78 a share with revenue up 5% to $21.34 billion. Lowe's beat views for EPS of $1.71 on $20.925 billion in sales. Same store sales grew 5%. Analysts had expected comps growth to slow to 3% vs. a 28.6% gain a year earlier and 2.2% the prior quarter.
Sales momentum continues in February, the company said in a release. Despite business uncertainties, Lowe's now expects 2022 EPS of $13.10-$13.60, up from a prior view for $12.25-$13, and sales of $97 billion-$99 billion, up from $94 billion-$97 billion earlier. Ahead of Wednesday's results, analysts were expecting 2022 EPS to grow to $12.93 with sales reaching $97.256 billion, according to FactSet.
Lowe's stock pared gains to close up 0.2% at 215.09 after touching a high of 227.75 earlier Wednesday. It fell 3.6% Tuesday as HD stock tumbled following tepid guidance.
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Home Depot Stock, Earnings
On Tuesday, Home Depot earnings rose 21% to $3.21 a share, with revenue up nearly 11% to $35.72 billion. Same-store sales grew 8.1%, or 7.6% in the U.S.
The home improvement giant topped Wall Street's views for EPS of $3.18 per share on revenue $34.88 billion. Same-store sales were forecast to increase 5% vs. a 24.5% gain a year ago and 6% the prior quarter, FactSet shows.
For 2022, Home Depot sees sales growth "slightly positive" and EPS growth in the low single digits. Analysts now expect full-year 2023 earnings to grow 3.6% as sales rise 1.6%, FactSet said.
Management projected a flat operating margin for 2022, and pointed to broader uncertainty with regard to the impact from inflation. Home Depot also raised its quarterly dividend by 15% to $1.90 a share.
Home Depot stock fell 2.4% in choppy trade Wednesday, extending a 8.8% plunge Tuesday. Home Depot stock has fallen far below critical levels of technical support, and has erased all of its gains since October. It is down more than 20% so far this year, and closing in fast on Salesforce.com as the Dow's worst performer, so far in 2022.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
