Lowe's Companies (LOW)

Lowe's (LOW) reported net earnings of $938 million for the quarter ended August 1, 2008, a 7.9 percent decline from the same period a year ago. Diluted earnings per share declined 4.5 percent to $0.64 from $0.67 in the second quarter of 2007. For the six months ended August 1, 2008, net earnings declined 12.1 percent to $1.54 billion while diluted earnings per share declined 8.7 percent to $1.05.

Sales for the quarter increased 2.4 percent to $14.5 billion, up from $14.2 billion in the second quarter of 2007. For the six months ended August 1, 2008, sales increased 0.7 percent to $26.5 billion. Comparable store sales for the second quarter declined 5.3 percent and declined 6.7 percent in the first half of 2008.

"Our sales results for the quarter, while better than our forecast, reflect the realities of the continuing macro economic pressures on our industry," commented Robert A. Niblock, Lowe's chairman and CEO.

It is safe to say that housing will lag well into if not past 2009 before it bottoms and turns. The CEO's of both Toll Brothers (TOLL) and Hovnanian (HOV) feel this way which probably means past 2009 since one would expect both to be on the optimistic side. If that is true, then there ought to be no hurry to purchase shares of either Lowe's or Home Depot since this means at best their results will stagnate and most likely continue to decline.

Many of the areas where Lowe's is planning to open new stores in 2007 are already served by Home Depot stores.

Lowe's is severely outsized by Home Depot and will not pose a serious challenge the larger company for market share and revenues.