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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) appears quite encouraging, thanks to its sturdy growth endeavors. A strong digital base has been aiding the company’s performance for a while now. LOW’s Total Home strategy, including complete solutions for various home improvement needs, also bodes well. The company’s Pro business has also been yielding results. Buoyed by such strengths, the renowned home-improvement retailer’s shares have increased 13% in the past three months compared with the industry’s 8.1% rise.
Let’s delve deeper.
Strategies in Detail
Lowe’s has been making investments in its omnichannel capabilities to drive growth. These areas include expanding the online assortment, boosting the user experience and improving fulfillment. Also, it has been advancing Lowes.com’s assortment to resonate well with customers' designs and lifestyles. Management has been enhancing the pick up in store experience to streamline processes and advance technology. These enhancements led to faster fulfillment and a 400-basis point increase in pickup in-store customer satisfaction scores in the first quarter of fiscal 2023.
Apparently, online sales accelerated with 6% comparable sales growth, accounting for more than a 10% sales penetration. The growth was backed by higher Pro sales stemming from advanced Pro digital experience with the latest tools and personalization. Also, the company is expanding its DIY online experience by making home-improvement projects easier for customers to visualize, estimate and shop.
Image Source: Zacks Investment Research
Within the supply chain, the company continued to roll out its market delivery model, bringing it to 12 geographic regions in the country and supporting over 1,100 stores. It remains on schedule to roll out market delivery by 2023. Management is on track with advancing the same-day and next-day fulfillment capabilities. It constantly pilots various gig network solutions, such as partnering with Instacart across many markets with same-day DIY home delivery. Meanwhile, its focus on the perpetual productivity improvement initiative has also been yielding results.
Pro customers have been a significant driver in Lowe's business growth. In a bid to continue augmenting sales from pro customers, the company has been augmenting pro-focused brands. It had refurbished the pro-service business website, LowesForPros.com, to give special attention to the needs of Pro customers. Management is focused on improving Pro product and service offerings with the company’s MVP Pro Rewards and partnership program and enhancing Pro Customer Relationship Management.
Further, management has launched Pro online business tools. Lowe’s is focused on enhancing the Pro offering across the company’s stores and online with improved service levels, deeper inventory quantities, intuitive store layout and more Pro national brands. The Pro segment is expected to continue its momentum with improved in-stock inventory levels, enhanced service offerings and a Pro loyalty program. Going ahead, management expects Pro to exceed DIY for the current fiscal year as Pro backlogs remain sturdy and demand for Pro services stands strong.
What’s More?
We note that the analysts look optimistic about the company. The Zacks Consensus Estimate for Lowe’s fiscal 2024 sales and earnings per share (EPS) is currently pegged at $89.5 billion and $14.61, respectively. These estimates suggest growth of 1.9% and 8.9%, respectively, from the year-ago fiscal quarter’s corresponding figures.
Overall, Lowe’s remains well-positioned to capitalize on the demand in the home improvement market, backed by investments in technology, merchandise category and strength in the Pro business. The long-term expected earnings growth rate of 12.6% coupled with a VGM Score of B further speaks volumes for this current Zacks Rank #3 (Hold) company.
Solid Picks in Retail
We have highlighted three better-ranked stocks, namely Builders FirstSource, Inc. (BLDR - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and Fastenal Company (FAST - Free Report) .
The Zacks Consensus Estimate for Builders FirstSource’s next financial-year sales suggests growth of 4.1%, respectively, from the year-ago reported figure. BLDR delivered a trailing four-quarter earnings surprise of 68.3%, on average.
Tecnoglass, engaged in manufacturing architectural glass and windows, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 22.7%, on average.
The consensus estimate for Tecnoglass’ current financial-year sales and EPS suggests growth of 18.2% and 25%, respectively, from the year-ago reported figures.
Fastenal, a distributor of industrial and construction supplies, currently carries a Zacks Rank #2 (Buy). FAST delivered an average earnings surprise of 9.2% in the trailing four quarters.
The Zacks Consensus Estimate for Fastenal’s current financial-year EPS suggests growth of 4.1% from the year-ago reported figure.
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Lowe's (LOW) Rides High on Growth Strategies: Apt to Hold
Lowe's Companies, Inc. (LOW - Free Report) appears quite encouraging, thanks to its sturdy growth endeavors. A strong digital base has been aiding the company’s performance for a while now. LOW’s Total Home strategy, including complete solutions for various home improvement needs, also bodes well. The company’s Pro business has also been yielding results. Buoyed by such strengths, the renowned home-improvement retailer’s shares have increased 13% in the past three months compared with the industry’s 8.1% rise.
Let’s delve deeper.
Strategies in Detail
Lowe’s has been making investments in its omnichannel capabilities to drive growth. These areas include expanding the online assortment, boosting the user experience and improving fulfillment. Also, it has been advancing Lowes.com’s assortment to resonate well with customers' designs and lifestyles. Management has been enhancing the pick up in store experience to streamline processes and advance technology. These enhancements led to faster fulfillment and a 400-basis point increase in pickup in-store customer satisfaction scores in the first quarter of fiscal 2023.
Apparently, online sales accelerated with 6% comparable sales growth, accounting for more than a 10% sales penetration. The growth was backed by higher Pro sales stemming from advanced Pro digital experience with the latest tools and personalization. Also, the company is expanding its DIY online experience by making home-improvement projects easier for customers to visualize, estimate and shop.
Image Source: Zacks Investment Research
Within the supply chain, the company continued to roll out its market delivery model, bringing it to 12 geographic regions in the country and supporting over 1,100 stores. It remains on schedule to roll out market delivery by 2023. Management is on track with advancing the same-day and next-day fulfillment capabilities. It constantly pilots various gig network solutions, such as partnering with Instacart across many markets with same-day DIY home delivery. Meanwhile, its focus on the perpetual productivity improvement initiative has also been yielding results.
Pro customers have been a significant driver in Lowe's business growth. In a bid to continue augmenting sales from pro customers, the company has been augmenting pro-focused brands. It had refurbished the pro-service business website, LowesForPros.com, to give special attention to the needs of Pro customers. Management is focused on improving Pro product and service offerings with the company’s MVP Pro Rewards and partnership program and enhancing Pro Customer Relationship Management.
Further, management has launched Pro online business tools. Lowe’s is focused on enhancing the Pro offering across the company’s stores and online with improved service levels, deeper inventory quantities, intuitive store layout and more Pro national brands. The Pro segment is expected to continue its momentum with improved in-stock inventory levels, enhanced service offerings and a Pro loyalty program. Going ahead, management expects Pro to exceed DIY for the current fiscal year as Pro backlogs remain sturdy and demand for Pro services stands strong.
What’s More?
We note that the analysts look optimistic about the company. The Zacks Consensus Estimate for Lowe’s fiscal 2024 sales and earnings per share (EPS) is currently pegged at $89.5 billion and $14.61, respectively. These estimates suggest growth of 1.9% and 8.9%, respectively, from the year-ago fiscal quarter’s corresponding figures.
Overall, Lowe’s remains well-positioned to capitalize on the demand in the home improvement market, backed by investments in technology, merchandise category and strength in the Pro business. The long-term expected earnings growth rate of 12.6% coupled with a VGM Score of B further speaks volumes for this current Zacks Rank #3 (Hold) company.
Solid Picks in Retail
We have highlighted three better-ranked stocks, namely Builders FirstSource, Inc. (BLDR - Free Report) , Tecnoglass Inc. (TGLS - Free Report) and Fastenal Company (FAST - Free Report) .
Builders FirstSource, a leading supplier of building materials and construction services, currently 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 Builders FirstSource’s next financial-year sales suggests growth of 4.1%, respectively, from the year-ago reported figure. BLDR delivered a trailing four-quarter earnings surprise of 68.3%, on average.
Tecnoglass, engaged in manufacturing architectural glass and windows, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 22.7%, on average.
The consensus estimate for Tecnoglass’ current financial-year sales and EPS suggests growth of 18.2% and 25%, respectively, from the year-ago reported figures.
Fastenal, a distributor of industrial and construction supplies, currently carries a Zacks Rank #2 (Buy). FAST delivered an average earnings surprise of 9.2% in the trailing four quarters.
The Zacks Consensus Estimate for Fastenal’s current financial-year EPS suggests growth of 4.1% from the year-ago reported figure.