Lowe's Adds Maintenance Supply Headquarters to Portfolio

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In an effort to strengthen its relationship with pro customers, Lowe's Companies, Inc.LOW has concluded the acquisition of Maintenance Supply Headquarters, the distributor of maintenance, repair and operations ("MRO") products. This $512 million buyout will help in adding multi-family property management customers.

Of late, Lowe's has been focusing on maintenance, repair and operations products which is evident from its acquisition of Maintenance Supply Headquarters and also the earlier buyout of Central Wholesalers.

Following the acquisitions of Maintenance Supply Headquarters, the company will have 13 distribution centers which will provide services to customers in 29 geographic areas mostly in western, southeastern as well as south central U.S. Lowe's already has MRO distributor services in the Mid-Atlantic and Northeast U.S.

In total, the company has now 16 distribution centers with the acquisition of both Maintenance Supply Headquarters and Central Wholesalers. These distribution centers will generate more than $400 million in incremental annual sales.

We believe that an improving job scenario, gradual recovery in the housing market and merchandising initiatives bode well for Lowe's in the long run. Additionally, the Canadian business has been performing quite well. The company had acquired former Target locations across Canada, in a bid to penetrate the Canadian market further. Moreover, the buyout of RONA will help augment its position in the Canadian market.

We observed that Lowe's shares have declined 5.2% in the past one month, wider than the Zacks categorized Building Products-Retail/Wholesale industry's fall of 2.9%. Recent decline in share price was primarily due to lower-than-expected first-quarter fiscal 2017 results and trimmed guidance.

Zacks Rank & Stocks to Consider

Lowe's currently carries a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the retail space include Aaron's, Inc. AAN , Conn's, Inc. CONN and The Children's Place, Inc. PLCE . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Aaron's has reported better-than-expected earnings in the trailing four quarters, with an average beat of 10.6%.

Conn's has an impressive long-term earnings growth rate of 18.5% and has also surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 80.9%.

The Children's Place has reported earnings beat in the trailing four quarters, with an average of 36.6%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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