We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Lowe's (LOW) Stock Dips 10% in 3 Months: Will it Rebound?
Read MoreHide Full Article
Lowe's Companies, Inc. (LOW - Free Report) has experienced a 10.2% decline in its share value over the past three months, underperforming the industry’s decline of 9.3%. In the same time frame, the company’s performance compared unfavorably with the broader Zacks Retail-Wholesale sector and the S&P 500's growth of 4.6% and 7.8%, respectively. Also, the stock is down 19% from its 52-week high of $262.49.
This leading home improvement retailer is experiencing subdued demand due to various market uncertainties, including economic factors such as inflation, interest rates and consumer confidence. Due to these challenges, management is not very optimistic about the upward revision in earnings estimates. The earnings estimates for the current fiscal year show a projected decline of 7.35% compared to the previous year.
Image Source: Zacks Investment Research
Lowe's Battles Near-Term Setbacks
Lowe’s has been facing challenges in its Do-It-Yourself (DIY) segment, which makes up a significant portion of its revenue. This softness is particularly evident in categories like flooring, kitchens, baths, and appliances. The primary issue appears to be consumers' cautious spending habits, which have led them to postpone purchasing larger-ticket items. This has negatively impacted Lowe’s overall sales performance.
Apart from this, Lowe’s witnessed a 4.1% decline in comparable sales, largely due to ongoing hesitancy among DIY customers regarding home improvement expenditures. Persistent inflationary pressures are making consumers more cautious about spending significantly on home improvement projects.
The uncertainty surrounding potential interest rate cuts, persistent inflationary pressures, and lower consumer preferences toward discretionary spending continue to dampen demand in the DIY home improvement sector.
Additionally, this Zacks Rank #3 (Hold) stock has been facing significant margin pressure, with expectations of a contraction in operating margin for fiscal 2024. The projected range stands between 12.6% to 12.7%, down from 13.3% in the previous fiscal year. This decline is mainly due to challenges such as sales volume deleverage and the impact of cycling through favorable legal settlements.
In the near term, the potential for recovery appears limited. Lowe's will need to monitor these trends closely and potentially adapt its strategies to better align with the changing consumer behavior influenced by economic conditions.
Will the Stock Rebound?
The current decline in the stock's performance is seen as a temporary setback mainly influenced by short-term market sentiment, economic conditions, or company-specific factors. However, the stock has strong underlying fundamentals that will support its recovery over the long term. There is an expectation for a rebound in the home improvement market, with mid-single-digit growth projected by the second half of 2025.
Lowe’s strategic growth initiatives, including store expansion efforts and a focus on enhancing customer experiences, position it as a top omnichannel retailer. Also, investments in service offerings, operational efficiency and long-term drivers like sustained home improvement demand are expected to support growth and profitability.
Despite facing near-term challenges, Lowe’s maintains an attractive valuation compared to its industry peers. With a forward 12-month price-to-earnings ratio of 16.77, which is below the industry average of 19.46, the stock presents an appealing opportunity for value-oriented investors. Supported by a robust Value Score of A, Lowe’s is poised for potential appreciation, bolstered by its strong growth prospects.
3 Picks You Can’t Miss
We have highlighted three better-ranked stocks, namely, Abercrombie & Fitch Co. (ANF - Free Report) , The Gap Inc. (GPS - Free Report) and DICK'S Sporting Goods (DKS - Free Report) .
Abercrombie & Fitch, a specialty retailer of premium, high-quality casual apparel, currently sports a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter average earnings surprise of 210.3%. You can seethe complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings indicates growth of 10.4% and 47.3%, respectively, from the year-ago figures.
Gap, a fashion retailer of apparel and accessories, currently flaunts a Zacks Rank #1. GPS has a trailing four-quarter earnings surprise of 202.7%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year sales and earnings per share suggests a rise of 0.2% and 21.7%, respectively, from the year-earlier levels.
DICK'S Sporting operates as an omni-channel sporting goods retailer. It currently carries a Zacks Rank #2 (Buy). DKS has a trailing four-quarter earnings surprise of 4.7%, on average.
The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal-year sales and earnings implies an improvement of 1.8% and 6.6%, respectively, from the prior-year numbers.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Lowe's (LOW) Stock Dips 10% in 3 Months: Will it Rebound?
Lowe's Companies, Inc. (LOW - Free Report) has experienced a 10.2% decline in its share value over the past three months, underperforming the industry’s decline of 9.3%. In the same time frame, the company’s performance compared unfavorably with the broader Zacks Retail-Wholesale sector and the S&P 500's growth of 4.6% and 7.8%, respectively. Also, the stock is down 19% from its 52-week high of $262.49.
This leading home improvement retailer is experiencing subdued demand due to various market uncertainties, including economic factors such as inflation, interest rates and consumer confidence. Due to these challenges, management is not very optimistic about the upward revision in earnings estimates. The earnings estimates for the current fiscal year show a projected decline of 7.35% compared to the previous year.
Image Source: Zacks Investment Research
Lowe's Battles Near-Term Setbacks
Lowe’s has been facing challenges in its Do-It-Yourself (DIY) segment, which makes up a significant portion of its revenue. This softness is particularly evident in categories like flooring, kitchens, baths, and appliances. The primary issue appears to be consumers' cautious spending habits, which have led them to postpone purchasing larger-ticket items. This has negatively impacted Lowe’s overall sales performance.
Apart from this, Lowe’s witnessed a 4.1% decline in comparable sales, largely due to ongoing hesitancy among DIY customers regarding home improvement expenditures. Persistent inflationary pressures are making consumers more cautious about spending significantly on home improvement projects.
The uncertainty surrounding potential interest rate cuts, persistent inflationary pressures, and lower consumer preferences toward discretionary spending continue to dampen demand in the DIY home improvement sector.
Additionally, this Zacks Rank #3 (Hold) stock has been facing significant margin pressure, with expectations of a contraction in operating margin for fiscal 2024. The projected range stands between 12.6% to 12.7%, down from 13.3% in the previous fiscal year. This decline is mainly due to challenges such as sales volume deleverage and the impact of cycling through favorable legal settlements.
In the near term, the potential for recovery appears limited. Lowe's will need to monitor these trends closely and potentially adapt its strategies to better align with the changing consumer behavior influenced by economic conditions.
Will the Stock Rebound?
The current decline in the stock's performance is seen as a temporary setback mainly influenced by short-term market sentiment, economic conditions, or company-specific factors. However, the stock has strong underlying fundamentals that will support its recovery over the long term. There is an expectation for a rebound in the home improvement market, with mid-single-digit growth projected by the second half of 2025.
Lowe’s strategic growth initiatives, including store expansion efforts and a focus on enhancing customer experiences, position it as a top omnichannel retailer. Also, investments in service offerings, operational efficiency and long-term drivers like sustained home improvement demand are expected to support growth and profitability.
Despite facing near-term challenges, Lowe’s maintains an attractive valuation compared to its industry peers. With a forward 12-month price-to-earnings ratio of 16.77, which is below the industry average of 19.46, the stock presents an appealing opportunity for value-oriented investors. Supported by a robust Value Score of A, Lowe’s is poised for potential appreciation, bolstered by its strong growth prospects.
3 Picks You Can’t Miss
We have highlighted three better-ranked stocks, namely, Abercrombie & Fitch Co. (ANF - Free Report) , The Gap Inc. (GPS - Free Report) and DICK'S Sporting Goods (DKS - Free Report) .
Abercrombie & Fitch, a specialty retailer of premium, high-quality casual apparel, currently sports a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter average earnings surprise of 210.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales and earnings indicates growth of 10.4% and 47.3%, respectively, from the year-ago figures.
Gap, a fashion retailer of apparel and accessories, currently flaunts a Zacks Rank #1. GPS has a trailing four-quarter earnings surprise of 202.7%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year sales and earnings per share suggests a rise of 0.2% and 21.7%, respectively, from the year-earlier levels.
DICK'S Sporting operates as an omni-channel sporting goods retailer. It currently carries a Zacks Rank #2 (Buy). DKS has a trailing four-quarter earnings surprise of 4.7%, on average.
The Zacks Consensus Estimate for DICK’S Sporting’s current fiscal-year sales and earnings implies an improvement of 1.8% and 6.6%, respectively, from the prior-year numbers.