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Lowe's (LOW) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Home Depot (HD) delivered earnings and revenue surprises of 5.09% and 0.32%, respectively, for the quarter ended April 2019. Do the numbers hold clues to what lies ahead for the stock?

Lowe's (LOW) closed at $113.76 in the latest trading session, marking a +0.55% move from the prior day. This move outpaced the S&P 500's daily gain of 0.35%. Meanwhile, the Dow gained 0.03%, and the Nasdaq, a tech-heavy index, added 0.7%.

Prior to today's trading, shares of the home improvement retailer had gained 12.18% over the past month. This has outpaced the Retail-Wholesale sector's gain of 6.1% and the S&P 500's gain of 5.14% in that time.

Wall Street will be looking for positivity from LOW as it approaches its next earnings report date. On that day, LOW is projected to report earnings of $1.36 per share, which would represent year-over-year growth of 14.29%. Our most recent consensus estimate is calling for quarterly revenue of $17.75 billion, up 2.27% from the year-ago period.

LOW's full-year Zacks Consensus Estimates are calling for earnings of $6.06 per share and revenue of $72.48 billion. These results would represent year-over-year changes of +17.9% and +1.64%, respectively.

Any recent changes to analyst estimates for LOW should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. LOW is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that LOW has a Forward P/E ratio of 18.67 right now. For comparison, its industry has an average Forward P/E of 12.91, which means LOW is trading at a premium to the group.

Investors should also note that LOW has a PEG ratio of 1.31 right now. 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. LOW's industry had an average PEG ratio of 1.13 as of yesterday's close.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 168, which puts it in the bottom 35% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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