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Is Lowe's (LOW) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Lowe's (LOW - Free Report) . LOW is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 17.06 right now. For comparison, its industry sports an average P/E of 18.63. Over the past 52 weeks, LOW's Forward P/E has been as high as 22.95 and as low as 14.40, with a median of 16.27.

Another valuation metric that we should highlight is LOW's P/B ratio of 14.16. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 35.41. Over the past year, LOW's P/B has been as high as 15.54 and as low as 10.98, with a median of 12.33.

Finally, our model also underscores that LOW has a P/CF ratio of 15.07. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. LOW's current P/CF looks attractive when compared to its industry's average P/CF of 15.72. Over the past 52 weeks, LOW's P/CF has been as high as 17.57 and as low as 12.54, with a median of 14.54.

Value investors will likely look at more than just these metrics, but the above data helps show that Lowe's is likely undervalued currently. And when considering the strength of its earnings outlook, LOW sticks out at as one of the market's strongest value stocks.




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