Driven by increased spending on home improvement, especially remodeling and big ticket items, Lowe’s Companies Inc. (LOW – Analyst Report) posted strong results for the third quarter of fiscal 2014 wherein both top and bottom lines surpassed the Zacks Consensus Estimate.

The company’s earnings of 59 cents per share in the quarter were 25.5% higher than the year-ago comparable quarter figure of 47 cents. Moreover, the company’s earnings for the reported quarter were a penny ahead of the Zacks Consensus Estimate of 58 cents.

Lowe’s Companies, Inc – Earnings Surprise | FindTheBest

The company witnessed a 5.6% rise in total revenue to $13,681 million, which came ahead of the Zacks Consensus Estimate of $13,546 million. Comparable-store sales (comps) increased 5.1% on a consolidated basis in the quarter.

In dollar terms, gross profit rose 5.3% year over year to $4,718 million. However, gross profit margin contracted 9 basis points (bps) to 34.49% mainly due to increased cost of sales as a percentage of net sales.

Other Financial Aspects

Lowe’s ended the quarter with cash and cash equivalents of $1,562 million, long-term debt (excluding current maturities) of $10,806 million and shareholders’ equity of $10,730 million.

During the quarter, the company repurchased $900 million worth of its common stock and distributed $229 million as dividends, while in the nine months of fiscal 2014 it repurchased $2.9 billion worth of its common stock and distributed $597 million as dividends.

Update on Fiscal 2014 Outlook

Following the third-quarter results, Lowe’s updated its fiscal 2014 outlook by combining its year-to-date results with its previously assumed forecast for the fourth quarter. The company now expects sales to register year-over-year growth of 4.5% to 5%, while comps are anticipated to rise in the 3.5% to 4% range. Earlier, the company had projected sales and comparable-store sales growth of approximately 4.5% and 3.5%, respectively.

Operating margin is expected to expand by nearly 70 to 75 bps compared with a 65 bps improvement projected earlier. Effective tax rate is projected to be almost 37.2%

Further, Lowe’s raised its earnings guidance for fiscal 2014 to $2.68 per share compared with $2.63 per share guided earlier. Currently, the Zacks Consensus Estimate for the fiscal stands at $2.62 per share.

Moreover, the company intends to open 6 home improvement stores and 4 hardware stores in the fiscal. As of Oct 31, 2014, the company operated 1,836 stores in the United States, Canada and Mexico.