Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Lowe's Companies (NYSE: LOW) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. The company's strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- LOWE'S COMPANIES INC reported flat earnings per share in the most recent quarter. 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 $1.68 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.07 versus $1.68).
- 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. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, LOWE'S COMPANIES INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The revenue fell significantly faster than the industry average of 26.2%. Since the same quarter one year prior, revenues slightly dropped by 5.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The gross profit margin for LOWE'S COMPANIES INC is currently lower than what is desirable, coming in at 34.30%. Regardless of LOW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.61% trails the industry average.
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