S&P 500 eases slightly from fresh record high after stronger economic growth
On Monday, Stifel analysts reiterated their Hold ratings for both Home Depot (NYSE: NYSE:HD) and Lowe’s (NYSE: LOW) stocks as the companies prepare to release their first-quarter results for fiscal year 2025. For Lowe’s, which trades at a P/E ratio of 19.1x and is scheduled to report on May 21, InvestingPro data shows that 9 analysts have recently revised their earnings estimates downward, reflecting a slower start to the year for these home improvement retailers. Despite a positive long-term outlook for the sector and the potential benefits from tariff disruptions and inflation, Stifel suggests a cautious stance is currently warranted.
The valuation of both Home Depot and Lowe’s shares is considered robust by historical standards, which is outlined in their report. According to InvestingPro analysis, Lowe’s maintains a "GOOD" overall financial health score of 2.63, with particularly strong profit and cash flow metrics. Analysts predict that the first-quarter commentary and any updated guidance provided will likely focus on the short-term uncertainties and the mixed trends following Liberation Day. This emphasis could overshadow the potential for a positive shift in the home improvement category.
Stifel’s analysts believe that Home Depot is in a stronger position to benefit from a market recovery due to its strategic positioning. On the other hand, Lowe’s greater reliance on the do-it-yourself (DIY) segment and its early-stage investments in professional services may limit investor excitement and confidence in the company’s performance turnaround.
The report suggests that should there be any further adjustments to estimates or a failure to meet expectations, it could present a chance to adopt a more positive outlook on the stocks. However, until there is concrete evidence of a sector inflection, the analysts recommend a watchful approach. They anticipate that any significant underperformance might offer an opportunity to reevaluate the companies more favorably in the future. Notably, Lowe’s has demonstrated strong shareholder commitment with 41 consecutive years of dividend increases, currently yielding nearly 2%. For deeper insights into Lowe’s financial health and additional ProTips, visit InvestingPro, where you’ll find comprehensive analysis and valuation metrics in the Pro Research Report.
In other recent news, Lowe’s Companies Inc (NYSE:LOW). has been the focus of several analyst updates and strategic moves. KeyBanc Capital Markets upgraded Lowe’s stock rating from Sector Weight to Overweight, setting a new price target of $266, citing strategic initiatives and the acquisition of Artisan Design Group (ADG) as key factors. UBS also maintained a Buy rating with a $300 price target, emphasizing the acquisition’s potential to strengthen Lowe’s professional segment. Meanwhile, DA Davidson kept a Neutral rating with a $270 target, noting the acquisition’s strategic interest despite its modest scale relative to Lowe’s overall sales.
On the other hand, Citi adjusted its price target for Lowe’s to $253, maintaining a Neutral stance due to anticipated challenges in the upcoming earnings report. Analyst Steven Zaccone predicts a slight shortfall in earnings per share, influenced by unfavorable weather and decreased demand for DIY products. The company is expected to release its first-quarter earnings for 2025 on May 21, with investors keen to see how Lowe’s has managed early-year challenges.
Additionally, President Donald Trump is scheduled to meet with major retailers, including Lowe’s, to discuss the impact of tariffs. The meeting aims to address concerns over potential price increases and operational slowdowns due to import taxes. As Lowe’s navigates these developments, the market continues to monitor the company’s strategic direction and financial performance.
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