Yahoo Finance Lowe's (LOW) Poised for Growth: Time to Buy the Stock?
Shares of leading home improvement retailer, Lowe's Companies, Inc. LOW, have gained nearly 11% over the past three months. The company, which operates primarily in the U.S., Canada and Mexico, might be a good addition to the portfolio of yield-seeking investors. The company’s growth prospects make us optimistic about the stock. Keep reading to find out what makes the stock an attractive pick.
Lowe’s began fiscal 2016 on a strong note as is evident from the positive earnings surprise in the first quarter. Also, both earnings and sales improved year over year. Fiscal first-quarter earnings increased 24.3% year over year to 87 cents per share and surpassed the Zacks Consensus Estimate of 85 cents. On the other hand, total revenue rose 7.8% year over year to $15,234 million in the quarter. The company’s sales gained from its efforts to provide a better omni-channel customer experience, with impressive performance by both indoor and outdoor categories.
The company not only delivered better-than-expected fiscal first-quarter results but also provided a robust outlook for fiscal 2016. Lowe’s expects sales growth (including the 53rd week) of nearly 6%, with the 53rd week expected to boost sales by 1.5% in the fiscal year. Comps, on a consolidated basis, are estimated to grow roughly 4% this year. Operating margin is expected to expand nearly 80–90 basis points. Further, Lowe’s now expects earnings for fiscal 2016, excluding the impact of RONA acquisition, to be $4.11 per share.
Following Lowe’s sturdy performance, the Zacks Consensus Estimate was revised higher as analysts raised their estimates. Analysts polled by Zacks are convinced that this Zacks Rank #2 (Buy) stock will see an upbeat performance in the future. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2016 and 2017 has moved up by 4 cents and 3 cents to $4.03 and $4.68, respectively.
Recently, Lowe’s has completed the acquisition of leading Canadian retailer and supplier of hardware, building materials as well as home renovation products – RONA – for $2.4 billion.
Other Stocks to Consider
Other favorably placed stocks in the retail sector that warrant a look include Delta Apparel Inc. DLA, Oxford Industries Inc. OXM and Perry Ellis International Inc. PERY. Both Delta Apparel and Oxford Industries sport a Zacks Rank #1 (Strong Buy), while Perry Ellis International holds a Zacks Rank #2 (Buy).
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LOWES COS (LOW): Free Stock Analysis Report
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