Why Lowe's Companies (LOW) Stock Is Climbing Today

NEW YORK (TheStreet) -- Lowe's Companies (LOW) shares are up 1.2% to $50.60 on Monday after analysts at Credit Suisse (CS) advised that investors buy the company's stock ahead of its second quarter earnings release Wednesday morning.

The firm cites strong spring home retail numbers as a reason for the optimistic outlook and says that it expects earnings and same store sales growth to come in ahead of analysts consensus estimates for the period.

Analysts expect Lowe's to report earnings of $1.02 per diluted share on revenue of $16.6 billion.

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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, increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. 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 0.3%. 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.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • 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 ($2.61 versus $2.13).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 15.6% when compared to the same quarter one year prior, going from $540.00 million to $624.00 million.
  • 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.

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