Back to top

Image: Bigstock

What Lowe's (LOW) CEO Retirement Plan Means for the Stock?

Read MoreHide Full Article

Lowe's Companies, Inc. (LOW - Free Report) has announced changes at its management level. The company’s CEO Robert Niblock is due to step down after 13 years of service. However, for the time being he will continue as the chairman, president and CEO of the company until a competent successor is found.

There is no denying of the fact that the company has scaled new heights and emerged as a leading home improvement retailer under his leadership. In the past 10 years, the stock has surged 293.9%.

However, in the recent past the company has not been able to extract benefit from improving job scenario and gradual recovery in the housing market. Shares the company have moved up 19.4% in the past three years, compared with industry's gain of 30.6%. On the other hand, stocks like Home Depot (HD - Free Report) , Beacon Roofing Supply (BECN - Free Report) and Builders FirstSource (BLDR - Free Report) , which belong to the same industry, have gained 53.8%, 72.4% and 203.9% in the past three years, respectively. Following, the news the Lowe’s shares shares jumped 6.6% on Monday.

 

 

In the home improvement retailing business, Lowe’s faces stiff competition from Home Depot and other home supply retailers on attributes such as location, price and quality of merchandise, in-stock consistency, merchandise assortments and customer service. We noted that in the fourth, third, second and first quarters of fiscal 2016, gross margin had contracted 25, 40, 10 and 43 basis points, respectively. In the first, second, third and fourth quarters of fiscal 2017, margin declined  a respective 64, 23, 28 and 70 basis points to 34.4%, 34.2%, 34.1% and 33.7%. Though, the company has registered comparable sales growth over the past few quarters, the improvement lagged Home Depot’s performance.

Moreover, in an effort to strengthen its relationship with Pro customers, Lowe's has concluded the acquisition of Maintenance Supply Headquarters, the distributor of maintenance, repair and operations products. Of late, Lowe’s has been focusing on maintenance, repair and operations products which is evident from its acquisition of Maintenance Supply Headquarters and also the earlier buyout of Central Wholesalers. However, the company is still behind Home Depot in terms of percentage of sales generation from Pro customers.

Lowe’s currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in