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

Zacks

In the latest trading session, Lowe’s (LOW) closed at $105.33, marking a +1.06% move from the previous day. The stock lagged the S&P 500′s daily gain of 1.42%. At the same time, the Dow added 1.15%, and the tech-heavy Nasdaq gained 2.29%.

Prior to today’s trading, shares of the home improvement retailer had lost 7.56% over the past month. This has was narrower than the Retail-Wholesale sector’s loss of 11.63% and lagged the S&P 500′s loss of 5.36% in that time.

Investors will be hoping for strength from LOW as it approaches its next earnings release, which is expected to be November 20, 2018. On that day, LOW is projected to report earnings of $1.02 per share, which would represent a year-over-year decline of 2.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.38 billion, up 3.65% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.23 per share and revenue of $71.63 billion. These totals would mark changes of +19.13% and +4.39%, respectively, from last year.


Investors should also note any recent changes to analyst estimates for LOW. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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 has moved 0.08% lower. LOW currently has a Zacks Rank of #3 (Hold).

In terms of valuation, LOW is currently trading at a Forward P/E ratio of 19.94. This valuation marks a premium compared to its industry’s average Forward P/E of 15.02.

Meanwhile, LOW’s PEG ratio is currently 1.39. 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. LOW’s industry had an average PEG ratio of 1.39 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 179, which puts it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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