Does Lowe’s Stock Have More Room To Run?

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Trefis
LOW: Lowe's logo
LOW
Lowe's

Lowe’s (NYSE: LOW), a home-improvement retailer, has increased by 9% over the last twenty-one trading days (one month) and currently stands at around $209. It should be noted that the broader S&P500 returned almost 6% growth over the last month. The retailer’s stock has been down 18% so far this year, due to investors’ fears about an impending slowdown in the home improvement market. However, the company’s stock price gains of late can be attributed to the fact that stronger profits of $4.67 (up 10% year-over-year) and expanding margins overshadowed slowing sales in the recent Q2 report. The retailer saw a mixed second-quarter report with revenues missing by a value of $680 million but earnings beating market expectations by 7 cents. Lowe’s Q2 revenues were almost flat year-over-year (y-o-y) at $27.5 billion. It should be noted that comparable sales decreased 0.3% against an estimate of a 2.3% increase amid a DIY demand slowdown. But a 15.4% operating margin showed improvement from the prior year while exceeding estimates by 0.4%. Lowe’s also had a better inventory position this quarter with a growth of only 11% from the prior year, contrasting sharply with a more than 30% jump for rival Home Depot (NYSE: HD).

For the full year 2022, Lowe’s indicated the total revenues to fall toward the bottom of its range of $97 to $99 billion. It also forecasts comparable sales down 1% to up 1%. Operating margin, by contrast, is expected to trend toward the top end of a 12.8% to 13% forecast. In addition, full-year EPS is expected to trend toward the higher end of a $13.10 to $13.60 range.

Now, is LOW stock poised to decline in the short term or are gains looking more likely? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 64% chance of a rise in LOW stock over the next month (twenty-one trading days). See our analysis of LOW’s Stock Chance Of Rise for more details.

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Calculation of ‘Event Probability’ and ‘Chance of rising’ using last ten years’ data

[1] Returns of 2.4% or higher over a five-day period on 762 occasions out of 2514 (30%); Stock rose in the next five days in 434 of these 762 instances (57%)

[2] Returns of 6.2% or higher over a ten-day period on 347 occasions out of 2514 (14%); Stock rose in the next ten days in 227 of these 347 instances (65%)

[3] Returns of 9.2% or higher over a twenty-one-day period on 405 occasions out of 2514 (16%); Stock rose in the next twenty-one days in 259 of these 405 instances (64%)

It is helpful to see how its peers stack up. LOW Peers shows how Lowe’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

With inflation rising and the Fed raising interest rates, Lowe’s has fallen 18% this year. Can it drop more? See how low can LOW stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 LOW Return 10% -18% 197%
 S&P 500 Return 2% -11% 89%
 Trefis Multi-Strategy Portfolio 2% -12% 247%

[1] Month-to-date and year-to-date as of 8/22/2022
[2] Cumulative total returns since the end of 2016

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