Lowe's Cos Inc
The company also announced plans to buy back up to $5 billion of common shares and said it expects same-store sales to increase 1 percent to 3 percent this year.
The fourth-quarter results suggest the worst of the economic cycle is likely behind us, Chief Executive Robert Niblock said in a statement.
While falling home prices and high unemployment continue to weigh on consumers, improving same-store sales trends provide an encouraging sign that consumers are gaining the confidence to take on more discretionary projects, he said.
Lowe's said fourth-quarter profit rose to $205 million, or 14 cents a share, from $162 million, or 11 cents a share, a year earlier.
Analysts on average expected 12 cents a share, according to Thomson Reuters I/B/E/S.
Sales rose 2 percent to $10.17 billion, beating the average estimate of about $10.01 billion. Same-store sales, an important retail measure, fell 1.6 percent.
Lowe's shares were up 37 cents, or 1.6 percent, to $23.50 in premarket trade.
(Reporting by Dhanya Skariachan; Editing by Derek Caney and John Wallace)