Shares of Lowe's (LOW - Free Report) have fallen over 9% in last month amid the broader market downturn. With that said, Home Depot (HD - Free Report) posted stronger-than-expected quarterly earnings results Tuesday and raised its full-year earnings guidance. So, might now be time to think about buying Lowe’s stock? Let’s take a look at its Q3 outlook and some fundamentals to find out.
Q3 Retail Overview
Home Depot, Macy’s (M - Free Report) , and Walmart (WMT - Free Report) helped kick off the busy part of Q3 earnings season for traditional brick-and-mortar retailers. All three reported solid results, yet retail stocks saw a bit of a pullback overall.
As of Friday morning, 63.2% of the retailers in the S&P 500 had reported their quarterly results, which includes the likes of Amazon (AMZN - Free Report) and restaurants. This groups’ earnings were up 30.5% on 6.9% higher revenues. Plus, 91.7% had topped quarterly EPS estimates and 70.8% beat revenue projections. Looking ahead, we are stilling waiting on reports from Target (TGT - Free Report) and other big-time retailers (also read: Pullback in Retail Stocks Reflects Elevated Expectations).
LOW Stock Price Movement
As we mentioned at the top, shares of Lowe's have plummeted over 9% in the last month. Shares of LOW closed regular trading Friday at $93.25, which marked a roughly 21% downturn from their 52-week and all-time high of $117.70 a share.
Jumping back over the last year, the home improvement retailer’s stock is up 16%, which outpaces the S&P 500’s 6% climb and its industry’s 9% jump. Plus, we can see that LOW stock has performed rather well over the past five years.
Moving on, LOW is currently trading at 16.1X forward 12-month Zacks Consensus EPS estimates. This marks a slight discount compared to the S&P’s 16.4X and its industry’s 24.5X. Lowe’s is also trading below Home Depot’s 17.6X.
Over the last year, LOW has traded as high as 22.9X, with a one-year median of 17.1X. Lowe’s stock is currently trading above its year-long low of 14.5X. Looking back over the last five years, we can see that LOW’s valuation hardly appears stretched at the moment.
Our current Zacks Consensus Estimate is calling for Lowe’s to post Q3 revenues of $17.33 billion, which would mark a 3.33% jump from the year-ago period. We should note that the company’s Q2 revenues popped 7.1% and topped estimates.
Maybe more importantly, the retailer’s same-store sales are projected to jump 2.95% from the year-ago quarter when comps jumped 5.7%. Sales at Lowe's stores open for at least 12 months popped 5.2% in the second quarter. Meanwhile, the company’s full-year revenues are projected to climb by 4.2% to reach $71.49 billion.
At the bottom end of the income statement, Lowe’s adjusted quarterly earnings are projected to fall 7.62% to touch $0.97 per share. The home improvement retailer’s adjusted fiscal 2018 earnings are expected to climb by nearly 17.8% to reach $5.17 per share.
Investors also need to know that Lowe’s has seen its earnings estimate revision picture turn rather negative over the last 30 days. The two charts below help to show how the company’s earnings picture has trended recently.
Lowe’s is currently a Zacks Rank #3 (Hold). LOW stock has also been trending in the wrong direction as have its earnings estimates. Therefore, it might be best just to keep an eye on Lowe’s for now.
The company is set to release its Q3 financial results before the opening bell onTuesday, November 20.
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