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Lowe's (LOW) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Lowe's (LOW) closed at $103.96, marking a +0.42% move from the previous day. This move outpaced the S&P 500's daily loss of 0.16%. At the same time, the Dow added 0.11%, and the tech-heavy Nasdaq lost 0.44%.

Prior to today's trading, shares of the home improvement retailer had gained 4.2% over the past month. This has lagged the Retail-Wholesale sector's gain of 4.42% and outpaced the S&P 500's gain of 4% in that time.

Investors will be hoping for strength from LOW as it approaches its next earnings release, which is expected to be August 21, 2019. In that report, analysts expect LOW to post earnings of $2.02 per share. This would mark a year-over-year decline of 2.42%. Our most recent consensus estimate is calling for quarterly revenue of $21 billion, up 0.52% from the year-ago period.

LOW's full-year Zacks Consensus Estimates are calling for earnings of $5.59 per share and revenue of $72.47 billion. These results would represent year-over-year changes of +8.75% and +1.62%, respectively.

Any recent changes to analyst estimates for LOW should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.04% lower. LOW is currently a Zacks Rank #3 (Hold).

Digging into valuation, LOW currently has a Forward P/E ratio of 18.52. For comparison, its industry has an average Forward P/E of 13.04, which means LOW is trading at a premium to the group.

It is also worth noting that LOW currently has a PEG ratio of 1.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.43 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 151, which puts it in the bottom 42% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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