Lowe’s Companies NYSE: LOW Price action has retreated from its October peak, giving investors a second chance. The ability to add positions or create new ones at a reduced price. The sluggish results are causing a pullback, but it’s unlikely to deepen much further based on the company’s performance and prospects for next year. Lowe’s and other retailers continue to struggle, but the company’s earnings and other reports show signs of consumer resilience and strength. Reports from Lowe, Home Depot New York Stock Exchange: HDAnd Walmart New York Stock Exchange: WMT show consumers that they are embarrassed by expensive projects. However, spending on smaller items is solid and supported by digital trade channels.
Lowe’s Companies Today
Lowe’s Companies
(As of 11/21/2024 ET)
- 52 week range
- $196.23
▼
$287.01
- Dividend yield
- 1.73%
- P/E ratio
- 22.14
- Target price
- $277.92
The bottom line is that Lowe’s revenue will decline in 2024, but less than expected, and growth is expected to resume in 2025. Revenue is expected to grow at a low single-digit rate, and the consensus figure is likely to be low. Earnings growth will be stronger in 2025 and will be critical to the return on equity outlook. Lowe’s has reduced its share buybacks in 2024 to better align earnings with declining cash flow. With increased cash flow, the company can pay down debt, reverse shareholder deficits and accelerate share repurchase operations. The bigger opportunity is that tailwinds are expected to form in 2025 from lower interest rates and Trump’s policies, and Lowe’s is well positioned to benefit from them.
Lowe’s Beats Expectations, Raises Forecasts, Shares Fall
Lowe’s price pullback contradicts its results and forecasts, which beat consensus as reported by MarketBeat. The company’s net sales of $20.17 billion were down year-over-year, but only 1.5%, beating consensus estimates by 130 basis points. Strength comes from positive competitors in the professional and digital segments, and buoyant demand contributed to these results. Despite this, CEO Larry Ellison noted that consumer demand for smaller ticketing projects remains strong, which is helping drive sales.
Lowe’s stock forecast today
$277.92
Growth potential 4.68%Moderate purchase
Based on ratings from 25 analysts
| High forecast | $310.00 |
|---|---|
| Average forecast | $277.92 |
| Low forecast | $240.00 |
Lowe’s Stock Forecast Details
Margin news is also mixed, with margins contracting but less than expected. The company reported an 80 basis point decline in gross profit and a smaller 25 basis point decline in net profit margin, resulting in adjusted earnings per share of $2.89 and down $0.17 or 5.5% year over year. However, adjusted earnings per share were also 350 basis points better than expected, raising expectations for positive quarterly cash flow and clarifying the outlook for a stronger balance sheet and return on equity.
The only bad news is that the pace of share repurchases has slowed. The company spent just $0.758 billion in the third quarter of this year, compared to more than double last year, but continues to reduce that figure. As a result of the 2024 events, their number decreased by more than 3% and may remain at current levels. The dividend is safe at about 40% of this year’s earnings forecast and is likely to rise in 2025 if the rate stays in the low single digits.
Low’s forecasts coincide with analyst trends: LOW is undervalued
Lowe’s forecast is not reliable, but full-year targets exceeded the consensus forecast, in line with analyst trends. Analyst trends include rising revenue, earnings, sentiment and stock targets, with sentiment strengthening to a Moderate Buy and a consensus price target of around $275. The $275 price target isn’t a big gain, about 5% above the critical support target, but the revision trend and most recent targets show growing confidence that this stock should trade near $300.
Lowe’s stock price action is favorable despite falling more than 3.5% after the release. This is a favorable action because it shows that the market is buying the stock at a critical support level and cannot fall further. Critical support coincides with peaks set in 2022 and earlier this year, and is a target for strong support that is unlikely to be surpassed. With previous sellers now expected to buy at this level, there is a high likelihood that the Lowe’s market will consolidate in the $260 to $280 range before moving to new highs sometime in 2025.
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