Back to top

Image: Bigstock

Lowe's Companies (LOW) Needs to Be Dumped: Here's Why

Read MoreHide Full Article

Shares of Lowe's Companies, Inc. (LOW - Free Report) , which have shown tremendous growth rate of more than 190% in the past five years, have been struggling in the past six months. In fact, the Zacks Rank #4 (Sell) company’s shares have declined 8.1% in past six months, underperforming the Zacks categorized Building Product-Retail/Wholesale industry which has declined 2.3% in the same time frame. Keep reading to find out the factors weighing down Lowe's shares recently.

Lowe’s disappointed investors with lower-than-expected top and bottom-line for the second quarter in a row, as the company reported third-quarter fiscal 2016 results. The company posted adjusted earnings of 88 cents per share that missed the Zacks Consensus Estimate of 96 cents. Net sales of $15,739 million also fell short of the Zacks Consensus Estimate of $15,798 million.

Following, dismal third-quarter results the company trimmed its fiscal 2016 earnings guidance. Management now envisions fiscal 2016 earnings to be $3.52 per share, sharply down from the previous projection of $4.06. For fiscal 2016, Lowe’s anticipates total sales growth of approximately 9% to 10%. Further, analysts pointed that the company’s expansion into regions where it already operates could cannibalize its sales performance and lower traffic count at existing stores.

Let’s look at Lowe’s earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company. In the past 30 days, the company’s earnings estimates for fiscal 2016 have declined to $3.92 from $4.01. Moreover, its earnings estimates for fiscal 2017 have moved down to 9 cents from $4.57 in same time period.

LOWES COS Price, Consensus and EPS Surprise

LOWES COS Price, Consensus and EPS Surprise | LOWES COS Quote

Stocks to Consider

Better-ranked stocks include Burlington Stores, Inc. BURL, Zumiez, Inc. ZUMZ, both these stocks sport a Zacks Rank #1 (Strong Buy), while The Tile Shop Holdings, Inc. TTS carries  a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.

Zumiez delivered an average positive earnings surprise of 30.9% in the trailing four quarters and has a long-term earnings growth rate of 15%.

Tile Shop Holdings delivered an average positive earnings surprise of 15.1% in the trailing four quarters and has a long-term earnings growth rate of 25%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Lowe's Companies, Inc. (LOW) - free report >>

Published in