NEW YORK (TheStreet) -- Shares of Lowe's Cos. (LOW) were gaining, up 0.39% to $67.79 in early market trading Tuesday, after analysts at BMO Capital Markets raised their rating on shares of the home improvement retailer this morning.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "Managing Director at BMO Capital Wayne Hood is the best in this group and if he likes it, I like it."
BMO upgraded the Lowe's to "outperform" from "market perform" with a higher price target of $81 from $73.
The firm cited the stronger housing and overall economic activity in the Southeastern states, where Lowe's has "a larger store footprint."
"Importantly, the company is poised to have strong earnings flow through as it holds payroll hours flat, tightly manages indirect costs, leverages marketing and fixed cost expense,and benefits from a lower D&A expense rate on moderating annual capital spending of $1.2 billion," BMO wrote in a note this morning.
Mooresville, NC-based Lowe's is a home improvement retailer operating 1,745 stores, consisting of 1,712 stores domestically, and 31 stores in Canada as well as two stores in Mexico.
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 growth in earnings per share, increase 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 has improved earnings per share by 14.8% 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 ($3.29 versus $2.70).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 7.8% when compared to the same quarter one year prior, going from $624.00 million to $673.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 5.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 49.16% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: LOW Ratings Report