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Earnings Estimates Rising for Lowe's (LOW): Will It Gain?

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Investors might want to bet on Lowe's (LOW - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

Analysts' growing optimism on the earnings prospects of this home improvement retailer is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Lowe's, as there has been strong agreement among the covering analysts in raising estimates.

Current-Quarter Estimate Revisions

The company is expected to earn $1.86 per share for the current quarter, which represents a year-over-year change of +31.91%.

Over the last 30 days, nine estimates have moved higher for Lowe's while one has gone lower. As a result, the Zacks Consensus Estimate has increased 15.67%.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $8.39 per share, representing a year-over-year change of +46.68%.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Lowe's. Over the past month, 14 estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 14.53%.

Favorable Zacks Rank

The promising estimate revisions have helped Lowe's earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Investors have been betting on Lowe's because of its solid estimate revisions, as evident from the stock's 7% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.


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