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

Zacks Equity Research

Lowe's (LOW) closed at $114.45 in the latest trading session, marking a +0.39% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.2%. Elsewhere, the Dow gained 0.04%, while the tech-heavy Nasdaq lost 0.13%.

Heading into today, shares of the home improvement retailer had gained 5.37% over the past month, lagging the Retail-Wholesale sector's gain of 6.5% and the S&P 500's gain of 7.08% in that time.

Wall Street will be looking for positivity from LOW as it approaches its next earnings report date. This is expected to be November 20, 2019. On that day, LOW is projected to report earnings of $1.34 per share, which would represent year-over-year growth of 28.85%. Meanwhile, our latest consensus estimate is calling for revenue of $17.71 billion, up 1.71% from the prior-year quarter.

LOW's full-year Zacks Consensus Estimates are calling for earnings of $5.67 per share and revenue of $72.53 billion. These results would represent year-over-year changes of +10.31% and +1.71%, respectively.

It is also important to note the recent changes to analyst estimates for LOW. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. LOW is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note LOW's current valuation metrics, including its Forward P/E ratio of 20.12. This valuation marks a premium compared to its industry's average Forward P/E of 14.09.

Also, we should mention that LOW has a PEG ratio of 1.5. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.41 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 64, putting it in the top 26% 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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