Lowe’s (LOW) Gains But Lags Market: What You Should Know

In the latest trading session, Lowe’s (LOW) closed at $200.97, marking a +0.1% move from the previous day. The stock lagged the S&P 500’s daily gain of 2.28%. At the same time, the Dow added 2.13%, and the tech-heavy Nasdaq gained 5.02%.

Prior to today’s trading, shares of the home improvement retailer had lost 1.37% over the past month. This was narrower than the Retail-Wholesale sector’s loss of 3.03% and the S&P 500’s loss of 4.61% in that time.

Lowe’s will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.25, up 26.4% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $22.77 billion, up 6.71% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $13.75 per share and revenue of $97.36 billion, which would represent changes of +14.2% and +1.15%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Lowe’s. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.25% lower within the past month. Lowe’s is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Lowe’s current valuation metrics, including its Forward P/E ratio of 14.61. For comparison, its industry has an average Forward P/E of 9.59, which means Lowe’s is trading at a premium to the group.

It is also worth noting that LOW currently has a PEG ratio of 1.1. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. The Building Products – Retail was holding an average PEG ratio of 1.69 at yesterday’s closing price.

The Building Products – Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 99, which puts it in the top 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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