Lowe's on Wednesday reported earnings and revenue that fell short of analysts' expectations, sending its stock skidding.
Lowe's, the No. 2 U.S. home improvement chain by sales, is gathering momentum, but its execution is not up to par with larger rival Home Depot, said JPMorgan Chase analyst Chris Horvers.
On Tuesday, Home Depot reported earnings and revenue that topped estimates. Horvers chalked up 70 percent of the disparate performance to execution and 30 percent to location.
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Horvers said on CNBC's "Squawk Box" that he counts Lowe's among the "atrophied growth companies of 2005," saying the it waited for macroeconomic improvements to take hold for about five years, while Home Depot focused on execution. Improving face-to-face interactions and having the right products in the right place at the right time served to shore up customer loyalty, he said.
"Home Depot not only has to sort of screw up to open a door to Lowe's, but when you go to Lowe's you have to have a good experience to want to go back there," he said.
As for location, Home Depot's business is focused in markets where housing is rebounding more robustly, including California, Florida and Nevada, Horvers added.
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Lowe's posted first-quarter earnings of 70 cents per share, as an improving job market encouraged Americans to spend on renovations. Revenue increased to $14.1 billion from $13.4 billion a year ago.
But Wall Street forecast home improvement retailer Lowe's would report 74 cents a share in earnings on $14.28 billion in revenue, according to a consensus estimate from Thomson Reuters.
After the earnings announcement, the company's shares more than 5 percent in premarket trading. (Click here to get the latest quotes for Lowe's.)
Total same-store sales rose 5.2 percent. Analysts on average had estimated a 6.1 percent rise, according to Consensus Metrix.
Horvers noted that Lowe's is only trailing Home Depot's comps sales growth by about 100 basis points, compared with a 200- to 300-point deficit in past quarters.
The company is also getting its house in order and outperforming Home Depot at moving big ticket purchases such as kitchen and bath materials and appliances, he said. However, Home Depot is hot on its trail.
"The market is coming their way, but Home Depot is not standing still, and as the consumer goes more toward big ticket, particularly decorative, Home Depot is putting a lot of dollars behind that to go after where the consumer is heading," he said.
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In mid-March, Lowe's announced a new repurchase program of $5 billion of the company's common stock and declared a quarterly cash dividend of 23 cents per share.
—CNBC's Tom DiChristopher and Terri Cullen and Reuters contributed to this report.