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On Wednesday, Loop Capital retained its Hold rating on shares of Lowe's Companies, Inc. (NYSE:LOW), with a steady price target of $230.00. The firm's stance remains unchanged despite Lowe's recent quarterly report, which showed same-store sales (SSS) falling short of both Loop Capital's forecasts and the wider market consensus. The financial institution has adjusted its expectations for a comparable sales recovery to be delayed by one year.
Loop Capital has revised its full-year 2024 revenue prediction for Lowe's to be $1.4 billion lower than the previous consensus. Moreover, the firm anticipates the company's earnings per share (EPS) for fiscal year 2024 to be 35 cents below the consensus, citing an expected earnings before interest and taxes (EBIT) margin that is 30 basis points shy of their earlier estimate. For the third quarter of fiscal year 2024, Loop Capital projects a 3% decline in same-store sales as Lowe's encounters a period of easier year-over-year comparisons.
Despite these adjustments, Loop Capital expressed a relatively positive outlook on Lowe's compared to its competitor, Home Depot (NYSE:HD). This perspective is supported by Lowe's mid-single-digit positive growth in professional customer sales during the second quarter of fiscal year 2024, which contrasts with Home Depot's decline during the same period. This performance is seen as an indication of Lowe's gaining market share within the small-scale professional segment.
In other recent news, Lowe's Companies Inc (NYSE:LOW). has been the subject of multiple analyses by financial firms. TD Cowen reaffirmed its hold rating and $240 price target, predicting slower growth in the professional customer segment and continued pressure from do-it-yourself customers.
Baird maintained an outperform rating on Lowe's with a steady price target of $265, citing the company's resilience and successful initiatives. RBC Capital reduced its price target to $238, citing a continuation of comparable sales softness and a revision of guidance. BofA Securities lowered its price target to $275, while Wells Fargo adjusted its target to $280.
In its Q2 financial results, Lowe's reported sales of $23.6 billion and a 5.1% decline in comparable sales year-over-year. Despite challenges in the DIY segment and unfavorable weather conditions, the company saw growth in its professional customer base and online sales. The company's adjusted earnings per share of $4.10 exceeded the estimate of $4.00 set by analysts.
Lowe's has been leveraging its Total Home strategy, technological advancements, and strategic partnerships with companies like Apple (NASDAQ:AAPL), Sherwin-Williams (NYSE:SHW), and Uber (NYSE:UBER) Eats to drive growth. The company remains committed to a 35% dividend payout ratio and share repurchases as part of its capital allocation priorities. Looking ahead, Lowe's anticipates better comparable sales in Q3 and Q4, with operating margin rates expected to be in line with the previous year.
InvestingPro Insights
As Lowe's Companies, Inc. (NYSE:LOW) navigates through a period of adjustment in same-store sales and earnings expectations, insights from InvestingPro can offer additional context for investors. With a market capitalization of $136.51 billion and a P/E ratio of 20.17, Lowe's is trading at a P/E ratio slightly below its near-term earnings growth, as indicated by a PEG ratio of 0.91. This suggests that the company's earnings growth may not be fully reflected in its current stock price.
InvestingPro Tips highlight that Lowe's has a strong track record of dividend consistency, having raised its dividend for 40 consecutive years and maintaining payments for 54 years. This could reassure investors looking for stable returns, especially as analysts predict the company will be profitable this year, with profitability sustained over the last twelve months. It's also worth noting that Lowe's has delivered a strong return over the last five years, which may interest long-term investors.
While Loop Capital maintains a Hold rating with a price target of $230.00, Lowe's current price is close to this target, with the previous close at $240.33. Furthermore, Lowe's is trading at 91.56% of its 52-week high, which could indicate room for potential upside if market conditions favor a rebound in the home improvement sector. For those seeking more in-depth analysis, InvestingPro offers additional tips to guide investment decisions, accessible at https://www.investing.com/pro/LOW.
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