Lowe's Companies, Inc. LOW remains well-positioned to capitalize on the demand in the home improvement market, backed by investments in technology, merchandise category and strength in Pro business. A strong digital base has been aiding the company’s performance for a while now. LOW’s Total Home strategy, including complete solutions for various home improvement needs, also bodes well.
This renowned home-improvement retailer has increased 15.1% in the past six months compared to the industry’s 13.2% gain. The long-term expected earnings growth rate of 13.2% coupled with a VGM Score of A further speaks volumes for this currently Zacks Rank #3 (Hold) stock’s potential.
The Zacks Consensus Estimate for Lowe’s fiscal 2022 sales and earnings per share (EPS) is currently pegged at $97.4 billion and $13.75, respectively. These estimates suggest growth of 1.2% and 14.2%, respectively, from the year-ago fiscal quarter’s corresponding figures. The consensus estimate for EPS of $14.09 reflects an increase of 2.5% year over year, raising analysts’ optimism about the stock.
Detailing Strategies
About its digital efforts, management has been making investments in the omnichannel, including expanding online assortment, boosting user experience and improving fulfillment capabilities. Sales at Lowes.com increased 12% year over year in the third quarter of fiscal 2022, representing about 10% sales penetration.
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Apparently, sales at Lowes.com increased 12% during the third quarter of fiscal 2022 from the year-ago fiscal quarter’s reported figure. This represents about 10% sales penetration. The company is focused on enhancing the omnichannel retailing capabilities in store operations, website and supply chain, with an aim to resonate well with the customers’ demand to shop, however, whenever and wherever they like.
Lowe’s is also expanding the market delivery strategy by adding bulky products like patios, grills, riding lawnmowers, appliances and many more. It is progressing with advancing the same-day and next-day fulfillment capabilities. Management constantly pilots various gig network solutions, such as partnering with Instacart across many markets with same-day DIY home delivery. Management had launched Lowe's One Roof Media Network and looks forward to boosting digital advertising.
With respect to Lowe's One Roof Media Network and advertising services, management recently declared that the company’s retail media network's advertising sales and operations departments will shift to in-house effective Jan 31. This initiative will enable Lowe's One Roof Media Network to own the end-to-end customer experience for brand advertisers. This will enrich the customers’ experience.
Pro customers continue to be a significant driver for Lowe's business. To keep augmenting sales from pro customers, management is enhancing Pro-focused brands with Pro offerings across LOW’s stores and online through improved service levels, deeper inventory quantities, intuitive store layout and more Pro national brands. The Pro segment is expected to continue its momentum with better in-stock inventory levels, an enriched service suite and a new Pro loyalty program. During the fiscal third quarter, pro sales jumped 16% from the year-ago fiscal quarter’s level and 36% on a two-year basis.
In a nutshell, Lowe’s is well-poised for growth, given the above-discussed tailwinds.
Solid Picks in Retail
We highlighted three top-ranked stocks, namely Tecnoglass TGLS, Chico's FAS CHS and Wingstop WING.
Tecnoglass manufactures and sells architectural glass,windows and aluminum products for residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and earnings per share suggests growth of 43.4% and 82.2%, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Chico's FAS, an omnichannel specialty retailer, currently sports a Zacks Rank of 1. CHS has a trailing four-quarter earnings surprise of 87.5%, on average.
The Zacks Consensus Estimate for Chico's FAS’s current financial-year sales and EPS suggests growth of 19.6% and 127.5%, respectively, from the year-ago reported figures.
Wingstop, which franchises and operates restaurants, currently holds a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 5.8%, on average.
The Zacks Consensus Estimate for Wingstop’s current financial-year sales and earnings per share suggests growth of 25.5% and 23%, respectively, from the year-ago reported numbers. WING has an expected EPS growth rate of 5.8% for three-five years.
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