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Lowe's maintains Buy stock rating by BofA on reported Q1 earnings

EditorNatashya Angelica
Published 05/22/2024, 11:49 AM
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On Wednesday, BofA Securities maintained its Buy rating on shares of Lowe's Companies Inc. (NYSE: NYSE:LOW), with a steady price target of $280.00. Lowe's recently reported its first-quarter earnings per share (EPS) of $3.06, surpassing expectations despite a comparable store sales decline of 4.1%.

The company's performance was attributed to robust spring execution and resilience in the face of seasonal weather challenges.

According to BofA Securities, Lowe's is successfully advancing with its Total Home strategy, which is evident from the positive outcomes in both professional customer (pro) comps and online sales growth. The firm anticipates that Lowe's will experience a stronger second half of the year, with both comparable store sales and earnings expected to improve due to easier comparisons and other contributing factors.

The analysis by BofA Securities suggests that despite the uncertain macroeconomic environment, Lowe's is well-positioned to achieve market share gains, margin improvements, and a return to its growth algorithm as conditions stabilize.

The company's current forecasts do not factor in any potential uplift in overall demand for the year, which presents an opportunity for upside if consumer and macroeconomic trends turn favorable.

BofA Securities highlights that their BofA EHS Indicator, part of the BofA US Home Sales Indicators report, signals a potential uptick in the latter half of the year. The firm's confidence in Lowe's prospects is reflected in the reiterated Buy rating and the $280 price objective, which is based on a 21 times multiple of the firm's fiscal year 2026/ calendar year 2025 estimated EPS of $13.50.

InvestingPro Insights

As Lowe's Companies Inc. (NYSE: LOW) continues to surpass earnings expectations and maintain its growth trajectory, InvestingPro data provides additional insights into the company's financial health and market position.

With a market capitalization of $127.77 billion and a P/E ratio sitting at 17.76, Lowe's is trading at a valuation that aligns closely with its near-term earnings growth, as indicated by a PEG ratio of 0.86. These metrics suggest a balance between the company's earnings and its stock price.

InvestingPro Tips highlight Lowe's as a significant player in the Specialty Retail industry with a commendable track record of raising its dividend for 40 consecutive years, showcasing its financial stability and commitment to shareholder returns.

Moreover, the company has maintained dividend payments for an impressive 54 consecutive years. These factors, combined with Lowe's profitable performance over the last twelve months and a strong return over the last five years, reflect a robust investment profile for the company.

For investors seeking a deeper dive into Lowe's financials and market dynamics, InvestingPro offers additional tips that can be accessed at https://www.investing.com/pro/LOW. To enhance your investment research with InvestingPro, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With six more InvestingPro Tips available, investors can gain a comprehensive understanding of Lowe's potential for long-term growth and profitability.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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