Lowe's (LOW) second quarter adjusted earnings beat analyst estimates, but missed slightly on revenue. It follows results from Home Depot (HD) which narrowly beat estimates. What do these results show about the state of the housing market? Smead Capital Management CEO Cole Smead joins Yahoo Finance Live to discuss.
“Housing has been probably the most misunderstood part of the economy, looking back over the last 10 years,” Smead says. Smead notes that “tight supply… is causing housing to be strong,” which “no one thought we’d be where we’re at on housing.”
What has impacted Home Depot and Lowe’s “is as interest rates have increased, you just marginally cause people to look less to a home equity line, to revamp their home, and do things of that nature,” Smead explains. But “the one tailwind” that these retailers have is millennials owning homes, as they are “a huge customer base to those retailers,” Smead says. Companies like Home Depot and Lowe’s “have really good secular trends in their favor,” Smead notes.
