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

Zacks Equity Research
·3 min read

Lowe's (LOW) closed the most recent trading day at $155.71, moving +1.47% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.14%. Elsewhere, the Dow gained 0.9%, while the tech-heavy Nasdaq lost 1.37%.

Prior to today's trading, shares of the home improvement retailer had lost 11.16% over the past month. This has lagged the Retail-Wholesale sector's loss of 1.79% and the S&P 500's gain of 2.25% in that time.

Investors will be hoping for strength from LOW as it approaches its next earnings release, which is expected to be November 18, 2020. On that day, LOW is projected to report earnings of $1.92 per share, which would represent year-over-year growth of 36.17%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $20.56 billion, up 18.22% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.54 per share and revenue of $85.11 billion, which would represent changes of +49.3% and +17.97%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for LOW. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.68% higher within the past month. LOW currently has a Zacks Rank of #2 (Buy).

Investors should also note LOW's current valuation metrics, including its Forward P/E ratio of 17.96. This represents a premium compared to its industry's average Forward P/E of 15.3.

It is also worth noting that LOW currently has a PEG ratio of 1.11. 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 1.11 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 37, putting it in the top 15% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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