Nasdaq Surges 150 Points; Lowe's Posts Upbeat Earnings

The Nasdaq Composite Index took a dip of 150 points on Thursday, January 16, 2025, as investors digested a mix of corporate earnings reports and geopolitical developments. However, one bright spot in the market was Morgan Stanley's (MS) strong fourth-quarter earnings, which beat analyst expectations and sent the company's stock soaring. Morgan Stanley reported earnings per share (EPS) of $2.22, nearly triple the year-ago figure of $0.74, and well above the consensus estimate of $1.70. Revenue jumped 26% year-over-year to $16.2 billion, outpacing the anticipated $15.03 billion. Quarterly profit more than doubled to $3.71 billion, from a year earlier when it had a pair of regulatory charges. The robust financial health and growth potential demonstrated by these results led to a 2.3% increase in Morgan Stanley's stock price, reaching its highest levels since November.



Meanwhile, Lowe's Companies, Inc. (LOW) reported net earnings of $1.1 billion and diluted earnings per share (EPS) of $1.99 for the quarter ended January 31, 2025, compared to diluted EPS of $1.77 in the fourth quarter of 2023. Total sales for the quarter were $18.6 billion, with comparable sales increasing 0.2%, driven by high-single-digit Pro and online comparable sales, strong holiday performance, and rebuilding efforts in the wake of recent hurricanes, partially offset by continued near-term pressure in DIY discretionary spending. Lowe's also recognized a $80 million pre-tax gain associated with the 2022 sale of the Canadian retail business, which positively impacted fourth quarter diluted EPS by $0.06. Excluding this gain, fourth quarter 2024 adjusted diluted EPS1 was $1.93.



Lowe's chairman, president, and CEO, Marvin R. Ellison, stated, "Our results this quarter were once again better-than-expected, as we continue to gain traction with our Total Home strategic initiatives. We remain confident in the long-term strength of the home improvement industry, and we are equally confident in our strategy to capitalize on the expected recovery. We are also pleased to award $80 million in discretionary bonuses to our frontline associates in recognition of their hard work and dedication to delivering excellent customer service."

Lowe's business outlook for fiscal 2025 reflects continued near-term uncertainty in the home improvement market. The company expects total sales of $83.5 to $84.5 billion, with comparable sales expected to be flat to up +1% as compared to the prior year. Operating income as a percentage of sales (operating margin) is expected to be 12.3% to 12.4%, with net interest expense of approximately $1.3 billion, depreciation and amortization expense of approximately $1.8 billion, and an effective income tax rate of approximately 24.5%. Diluted earnings per share are expected to be approximately $12.15 to $12.40, with capital expenditures of approximately $2.5 billion.

In conclusion, while the Nasdaq Composite Index experienced a decline of 150 points on Thursday, Morgan Stanley's strong earnings performance provided a positive counterpoint to the broader market's movements. The company's robust financial health and growth potential, driven by gains across key business segments, led to an increase in its stock price. As Morgan Stanley continues to expand its wealth management division and improve its technological infrastructure, investors should monitor the company's progress and consider its potential for future growth. Meanwhile, Lowe's strong earnings performance demonstrates the company's ability to adapt to changing market conditions and capitalize on opportunities in the home improvement industry. As Lowe's continues to execute its strategic initiatives and improve operational efficiency, it is well-positioned to maintain its positive trends in the face of near-term uncertainty.