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Home Depot rises on housing data, Lowe's results

NEW YORK (AP) -- Home Depot's stock hit an all-time high for a second straight day since reporting strong first-quarter results and boosting its full-year forecasts. Upbeat housing data and weaker-than-expected results from rival Lowe's on Wednesday helped keep Home Depot rising.

THE SPARK: Lowe's Cos. said Wednesday that its first-quarter profit rose almost 3 percent, but its earnings of 49 cents per share missed the 51 cents per share that analysts surveyed by FactSet were looking for. Revenue of $13.09 billion was short of Wall Street's $13.45 billion estimate. Lowe's, the No. 2 home improvement chain, said that cooler temperatures and more rain than normal for much of the quarter led to a delay in the spring selling season.

Signs of a continued housing recovery were supported on Wednesday with a strong second-quarter performance from homebuilder Toll Brothers Inc. and a healthy housing report.

Toll Brothers reported quarterly earnings of 14 cents per share on revenue of $516 million. Analysts expected earnings of 7 cents per share on revenue of $515.5 million.

A report from the National Association of Realtors said that sales of previously occupied U.S. homes rose in April to the highest level in three and a half years. Sales rose to a seasonally adjusted annual rate of 4.97 million, up from 4.94 million in March.

THE BACKGROUND: Those reports came a day after Home Depot credited the ongoing housing recovery with giving a lift to its latest quarterly performance. On Tuesday, Home Depot Inc. reported earnings of 83 cents per share on revenue of $19.12 billion. Analysts polled by FactSet predicted earnings of 76 cents per share on revenue of $18.62 billion.

The Atlanta company also lifted its full-year guidance. The world's biggest home improvement retailer now anticipates fiscal 2013 earnings of $3.52 per share, with revenue up about 2.8 percent. Its prior guidance was for earnings of $3.37 per share, with revenue rising about 2 percent. The revised outlook implies revenue of $76.83 billion, based on 2012's $74.75 billion.

Analysts expect full-year earnings of $3.54 per share on revenue of $76.98 billion.

THE ANALYSIS: David Schick of Stifel Nicolaus said in a client note that the housing recovery did help Home Depot's quarter, but that sales of big-ticket appliances provided a boost as well.

"Momentum is certainly on Home Depot's side," the analyst wrote.

While gardening sales weakened in the first quarter due to poor weather, Schick anticipates that Home Depot will be able to recapture some of these sales in the second quarter as it deals with pent-up demand.

The analyst maintained a "Hold" rating.

A representative for Home Depot did not immediately respond to an email seeking comment.

SHARE ACTION: The stock gained $1.61, or 2.1 percent, to $80.32 in afternoon trading. It touched $79.47 on Tuesday, only to top that on Wednesday by reaching a new all-time high of $81.56. For the year to date, the shares are up 27 percent.