Lowe's (LOW) Stock Price Target, Earnings Estimate Lowered by Analysts

NEW YORK (TheStreet) -- Lowe's (LOW) price target was lowered to $68 from $75 by analysts at Cantor Fitzgerald who also reduced their fiscal year 2015 earnings estimate to $3.29 per share from $3.35 per share. 

Analysts said that the price target reduction was due to their discounted free cash flow model, which reflects a 5% reduction to their long-term bottom-line projections.

They also reduced their fiscal year 2015 earnings estimate after the company reported weak first quarter results. The company reported revenue of $14.1 billion, or 70 cents per share, compared to analysts' expectations of $14.5 billion, or 76 cents per share.

In the same quarter last year, the company reported revenue of $13.4 billion, or 58 cents per share.

While earnings for the first quarter missed analysts' expectations, the home improvement retailer's CEO remains positive on the earnings growth compared to the same quarter last year.

"I am pleased that we executed well and delivered another strong quarter," CEO Robert Niblock said. "We generated comparable sales growth in all regions of the country and across all product categories, driving strong earnings per share growth."

The company said full-year 2015 sales are expected to rise 4.5% to 5.0% year over year, and same-store sales are pegged to increase 4.0% to 4.5%.

In Thursday's early morning trading, shares of Lowe's are gaining 1.3% to $69.38.

TheStreet Ratings team rates LOWE'S COMPANIES INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LOWE'S COMPANIES INC (LOW) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and solid stock price performance. We feel its 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:

  • LOWE'S COMPANIES INC reported significant earnings per share improvement 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 $2.70 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $2.70).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net income increased by 47.0% when compared to the same quarter one year prior, rising from $306.00 million to $450.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 7.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison 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 greatly exceeded that of the S&P 500.
  • Powered by its strong earnings growth of 58.62% and other important driving factors, this stock has surged by 59.97% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: LOW Ratings Report

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