"After a slow start to the year, Lowe's has driven solid sales growth of 4.6% to date in 2014 while improving profitability by 70bps, as its recent initiatives have lined up with strong underlying market trends and begun to pay off," analysts said about the North Carolina-based home improvement retailer.
"We see potential upside in Lowe's opportunity to narrow the gap to its largest competitor across several metrics (sales per square foot, average annual Pro spend, and operating margin). However, we highlight the risk associated with maintaining accelerated comps of 4% in light of a competitive market," analyst noted.
"Our 2015 EPS estimate of $3.25, based on 3.5% comp growth, reflects this risk," analysts continued.
"Given the strong 47% return in the stock YTD and its premium valuation to the S&P 500 (27% vs. its five-year average of 13%), LOW's approximately 2x current multiple reflects the risk/reward tradeoff, in our view," analysts added.
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: