Marvin Ellison’s honeymoon at Lowe’s Cos. may be coming to an end. Investors have bid up the stock since he took over as chief executive officer in July, but a lackluster fourth quarter may change that.

Fourth-quarter revenue was little changed at US$15.6 billion, compared with estimates of US$15.7 billion. A same-store sales gain of 1.7 per cent also missed projections.

Key Insights

-Bad weather, including a historic cold snap, may have played a part in the weak performance. Home Depot Inc., which disappointed investors with its results on Tuesday, said snow, cold and rain last quarter knocked 1 percentage point off same-store sales growth.

-Lowe’s and Home Depot, are often seen as proxies for confidence in the U.S. housing market. When homeowners believe prices will continue rising, they spend more. Values had been steadily going up since the recession, but have shown weakness lately, raising concerns about future growth for the home-improvement chains.

-The company also laid out sales expectations for the current fiscal year, saying revenue would rise 2 per cent and diluted earnings per share would be between US$6 and US$6.10.

-Ellison, a former Home Depot executive, joined Lowe’s in July and has been busy revamping management and operations while also closing stores. Investors had been pleased with the stock, which has gained about 9 percent since his arrival. They’ll find out much more in the coming months as the company enters its busiest selling season.

Market Reaction

-Lowe’s shares have gained 14 per cent this year through Tuesday’s close.