Rating Change #3
Lowe's Companies Inc (LOW) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- LOW's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- LOWE'S COMPANIES INC's earnings per share declined by 37.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LOWE'S COMPANIES INC increased its bottom line by earning $1.42 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.42).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, LOWE'S COMPANIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.11 is very low and demonstrates very weak liquidity.
Lowe's Companies, Inc., together with its subsidiaries, operates as a home improvement retailer. The company offers a range of products for maintenance, repair, remodeling, home decorating, and property maintenance. The company has a P/E ratio of 19.1, below the average retail industry P/E ratio of 22.7 and above the S&P 500 P/E ratio of 17.7. Lowe's Companies has a market cap of $32.99 billion and is part of the services sector and retail industry. Shares are up 2.8% year to date as of the close of trading on Tuesday.You can view the full Lowe's Companies Ratings Report or get investment ideas from our investment research center.