Lowe's Companies Inc. (NYSE:LOW) has been in corrective mode, having shed all the gains accrued early in the year. The sell-off has come on the broader stock market, coming under pressure amid valuation concerns. The company reporting impressive fourth-quarter results and a $9 billion buyback program might as well be the catalyst to trigger a bounce back after the recent pullback.
Solid Earnings
The retailer is coming off an impressive fourth quarter where strong execution allowed it to meet broad-based demand, driven by continued consumer focus on the home. Likewise, the retailer achieved a growth of over 16% in all merchandising departments. It also achieved a 19% growth across all U.S. regions.
The home improvement retailer generated $978 million or $1.33 a share, easily beating consensus estimates of $1.21 a share. Revenue also topped consensus estimates, coming in at $20.31, compared to $16 billion reported last year and $19.48 billion expected. Comparable store sales were up 28.1%, more than the 22% growth expected.
The better-than-expected results came on the company investing over $100 million in COVID-related support. Its full-year support for the COVID-19 pandemic totaled $900 million. During the quarter, Lowe also purchased 21.1 million shares valued at about $3.4 billion. It also paid $452 million in dividends.
Shareholder Returns
Lowe's capital returns to shareholders totaled $6.7 billion for the full year, with $5 billion going to share repurchase and $1.7 billion going towards dividends. In 2021 Lowe is planning to return $9 billion to shareholders through share repurchases.
Similarly, the company ended the quarter with $4.7 billion in cash and cash equivalent with $3 billion in an undrawn capacity as part of a revolving credit facility.
The better-than-expected financial results come when Lowe is transforming. The transformation focuses on expanding into the e-commerce business. Lowe is also looking to widen its base of professional home builders and contractors, which should help differentiate it from competitors.