Back to top

Image: Bigstock

Lowe's (LOW) Growth Efforts Bode Well, Stock Gains 29% YTD

Read MoreHide Full Article

Lowe's Companies, Inc. (LOW - Free Report) is moving up the charts, owing to its impressive growth ploys that are helping it retain the momentum for a while now. The company is well-poised to cash in on the prevailing trends in the home improvement market, given the constant investments in technology and the merchandise category as well as sturdy Pro and digital businesses. It also continues to benefit from the remodeling functions, as roughly two-thirds of Lowe's annual sales come from repair and maintenance activities. Its Total Home strategy, which includes providing complete solutions for various types of home improvement needs, is worth a mention.

The renowned home-improvement retailer’s shares have gained 29.4% in the year-to-date period compared with the industry’s 23% rally.

Let’s Delve Deep

Lowe's is bullish on the home-improvement industry, as it believes that consumers are strongly motivated to invest in homes. Its Total Home strategy focuses on strengthening customer engagement and market share, especially through the intensified focus on Pro customers. The initiative encompasses improving online business and enhancing localization efforts.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Pro customers have been key growth drivers for Lowe's business. The company has been augmenting the pro-focused brands and it refurbished its pro-service business website to efficiently serve the needs of such customers. In second-quarter fiscal 2021, the company’s Pro sales increased 21%, owing to its solid overall efforts to boost the category. The Pro segment is expected to continue its momentum on the back of enhanced service offerings and the Pro loyalty program.

Now speaking of the company’s digital strength, sales at Lowes.com increased 7% in the fiscal second quarter. This represents a 9% sales penetration. The company is focused on enhancing the omni-channel retailing capabilities with an aim to resonate well with customers’ demand to shop, whenever and wherever they like.

It also rolled out secure mobile checkout to improve service in high-traffic areas inside and outside the stores. The company has also completed the rollout of BOPIS lockers to 100% of its U.S. stores. The outstanding online initiatives are likely to aid its e-commerce strength, moving ahead.

Wrapping Up

The solid execution of the Total Home strategy has been fueling Lowe’s results. The strategy is helping the company cater to the robust demands across Pro, Lowes.com and its installation services business. Focus on driving productivity has been boosting its margins. For fiscal 2021, management projected revenues of $92 billion, suggesting year-over-year growth of 2.7%.

Lowe’s is likely to carry on the momentum, given all the aforesaid strategic initiatives. A VGM Score of A with an expected long-term earnings growth rate of 14.1% further speaks volumes for this Zacks Rank #3 (Hold) stock. In addition, the Zacks Consensus Estimate for 2021 sales and earnings is currently pegged at $93.1 billion and $11.26, respectively. Markedly, estimates suggest corresponding year-over-year growth of 4% and 27%.

Solid Picks You May Look at

Tecnoglass (TGLS - Free Report) , a Zacks Rank #1 (Strong Buy) stock, has a long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie (ANF - Free Report) has an expected long-term earnings growth rate of 18% and it currently flaunts a Zacks Rank #1.

GMS Inc. (GMS - Free Report) has delivered an earnings surprise of 19.5% in the trailing four quarters, on average. It currently sports a Zacks Rank of 1.

Published in