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Lowe's (LOW) Rides High on Growth Strategies: Apt to Hold
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Lowe's Companies, Inc. (LOW - Free Report) continues to cheer investors despite a tough operating backdrop, thanks to its robust business strategies. LOW’s Total Home strategy, which offers a complete solution for various home-improvement needs, bodes well. Management is focused on making improvements in the technology and merchandise category. Also, LOW’s Pro division has been performing outstandingly for a while now.
Shares of this home-improvement retailer have appreciated 9.4% in the past three months, outperforming the industry’s 1.4% growth. A VGM Score of B coupled with a projected long-term earnings growth rate of 13.1% further speaks volumes for this presently Zacks Rank #3 (Hold) stock.
Let’s Delve Deeper
Lowe’s has been making smart moves to offer customers a seamless shopping experience. In this context, LOW announced a partnership with Instacart to make same-day delivery available across its more than 1,700 stores nationwide. Customers can now order around 30,000 items for delivery and avail the same as fast as in an hour. This partnership makes LOW one of the first retailers on the Instacart App to offer same-day and scheduled delivery for huge items of about 3x3x5 feet and 60 pounds.
In addition, a sturdy digital base has been aiding Lowe’s performance for a while. Management continues making investments in the omni-channel capabilities to drive the overall business growth. LOW is steadily expanding its online assortment, boosting user experience and improving fulfillment capabilities. In a nutshell, Lowe’s is focused on enhancing its omni-channel retailing capabilities across in-store operations, website and supply chain to resonate well with customers’ demands to shop, however, whenever and wherever they like.
Image Source: Zacks Investment Research
We note that Pro customers remain a significant driver for Lowe's business. To keep augmenting sales from pro customers, management is enhancing the Pro-focused brands with Pro offerings across LOW’s stores and online through improved service levels, deeper inventory quantities, intuitive store layout and more Pro national brands.
The Pro segment is expected to continue its momentum with better in-stock inventory levels, an enriched service suite and a new Pro loyalty program. During the second quarter of fiscal 2022, pro sales jumped 13% from the year-ago fiscal quarter’s level and 37% on a two-year basis. The Pro business contributed around 25% to sales in the reported fiscal quarter.
Wrapping Up
On its last earnings call, Lowe’s projected revenues of $97-99 billion (including the 53rd week) for fiscal 2022. The 53rd week is likely to boost sales by $1-$1.5 billion. In fiscal 2021, Lowe’s revenues amounted to $96.3 billion. LOW anticipated a slight improvement in the gross margin from the year-ago reported figure. Management envisioned earnings per share of $13.10-$13.60 for the current fiscal year, higher than $12.04 earned last fiscal year.
The Zacks Consensus Estimate for Lowe’s fiscal 2022 sales and earnings per share (EPS) is currently pegged at $97 billion and $13.52, respectively. These estimates suggest growth of 0.7% and 12.3%, respectively, from the year-ago fiscal quarter’s corresponding figures, raising analysts’ optimism on the stock.
All in all, Lowe’s is well poised for growth, given the above-discussed tailwinds.
The Zacks Consensus Estimate for Ulta Beauty’s fiscal 2022 sales suggests growth of 13.7% from the corresponding year-ago level. ULTA has a trailing four-quarter earnings surprise of 32.8%, on average.
Buckle, a leading retailer of apparel, footwear and accessories has a Zacks Rank #2 (Buy) at present. BKE has a trailing four-quarter earnings surprise of 12.7%, on average.
The Zacks Consensus Estimate for Buckle’s fiscal 2022 sales and earnings per share (EPS) suggests growth of 6.8% and 4.5%, respectively, from the year-ago corresponding figures.
Designer Brands, the leading footwear and accessories designer, presently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Designer Brands’ fiscal 2022 sales and EPS suggests growth of 6.9% and 23.5%, respectively, from the corresponding year-ago levels. DBI has a trailing four-quarter earnings surprise of 55.1%, on average.
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Lowe's (LOW) Rides High on Growth Strategies: Apt to Hold
Lowe's Companies, Inc. (LOW - Free Report) continues to cheer investors despite a tough operating backdrop, thanks to its robust business strategies. LOW’s Total Home strategy, which offers a complete solution for various home-improvement needs, bodes well. Management is focused on making improvements in the technology and merchandise category. Also, LOW’s Pro division has been performing outstandingly for a while now.
Shares of this home-improvement retailer have appreciated 9.4% in the past three months, outperforming the industry’s 1.4% growth. A VGM Score of B coupled with a projected long-term earnings growth rate of 13.1% further speaks volumes for this presently Zacks Rank #3 (Hold) stock.
Let’s Delve Deeper
Lowe’s has been making smart moves to offer customers a seamless shopping experience. In this context, LOW announced a partnership with Instacart to make same-day delivery available across its more than 1,700 stores nationwide. Customers can now order around 30,000 items for delivery and avail the same as fast as in an hour. This partnership makes LOW one of the first retailers on the Instacart App to offer same-day and scheduled delivery for huge items of about 3x3x5 feet and 60 pounds.
In addition, a sturdy digital base has been aiding Lowe’s performance for a while. Management continues making investments in the omni-channel capabilities to drive the overall business growth. LOW is steadily expanding its online assortment, boosting user experience and improving fulfillment capabilities. In a nutshell, Lowe’s is focused on enhancing its omni-channel retailing capabilities across in-store operations, website and supply chain to resonate well with customers’ demands to shop, however, whenever and wherever they like.
Image Source: Zacks Investment Research
We note that Pro customers remain a significant driver for Lowe's business. To keep augmenting sales from pro customers, management is enhancing the Pro-focused brands with Pro offerings across LOW’s stores and online through improved service levels, deeper inventory quantities, intuitive store layout and more Pro national brands.
The Pro segment is expected to continue its momentum with better in-stock inventory levels, an enriched service suite and a new Pro loyalty program. During the second quarter of fiscal 2022, pro sales jumped 13% from the year-ago fiscal quarter’s level and 37% on a two-year basis. The Pro business contributed around 25% to sales in the reported fiscal quarter.
Wrapping Up
On its last earnings call, Lowe’s projected revenues of $97-99 billion (including the 53rd week) for fiscal 2022. The 53rd week is likely to boost sales by $1-$1.5 billion. In fiscal 2021, Lowe’s revenues amounted to $96.3 billion. LOW anticipated a slight improvement in the gross margin from the year-ago reported figure. Management envisioned earnings per share of $13.10-$13.60 for the current fiscal year, higher than $12.04 earned last fiscal year.
The Zacks Consensus Estimate for Lowe’s fiscal 2022 sales and earnings per share (EPS) is currently pegged at $97 billion and $13.52, respectively. These estimates suggest growth of 0.7% and 12.3%, respectively, from the year-ago fiscal quarter’s corresponding figures, raising analysts’ optimism on the stock.
All in all, Lowe’s is well poised for growth, given the above-discussed tailwinds.
Here Are 3 Key Stocks for You
Some better-ranked stocks are Ulta Beauty (ULTA - Free Report) , Buckle (BKE - Free Report) and Designer Brands (DBI - Free Report) .
Ulta Beauty, the leading beauty retailer, presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s fiscal 2022 sales suggests growth of 13.7% from the corresponding year-ago level. ULTA has a trailing four-quarter earnings surprise of 32.8%, on average.
Buckle, a leading retailer of apparel, footwear and accessories has a Zacks Rank #2 (Buy) at present. BKE has a trailing four-quarter earnings surprise of 12.7%, on average.
The Zacks Consensus Estimate for Buckle’s fiscal 2022 sales and earnings per share (EPS) suggests growth of 6.8% and 4.5%, respectively, from the year-ago corresponding figures.
Designer Brands, the leading footwear and accessories designer, presently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Designer Brands’ fiscal 2022 sales and EPS suggests growth of 6.9% and 23.5%, respectively, from the corresponding year-ago levels. DBI has a trailing four-quarter earnings surprise of 55.1%, on average.