NEW YORK (TheStreet) -- Lowe's (LOW) stock has been downgraded to "sell" from "hold" with a $37 price target, Canaccord Genuity said Wednesday. The firm said the revision was a valuation call as the stock is up 88% over the past two years.
Separately, TheStreet Ratings team rates LOWE'S COMPANIES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LOWE'S COMPANIES INC (LOW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LOW's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 2.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- LOWE'S COMPANIES INC has improved earnings per share by 24.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LOWE'S COMPANIES INC increased its bottom line by earning $2.13 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($2.62 versus $2.13).
- 35.50% is the gross profit margin for LOWE'S COMPANIES INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.65% trails the industry average.
- Net operating cash flow has remained constant at $1,994.00 million with no significant change when compared to the same quarter last year. In addition, LOWE'S COMPANIES INC has modestly surpassed the industry average cash flow growth rate of -8.51%.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- You can view the full analysis from the report here: LOW Ratings Report