A History of Outperforming Analyst Forecasts and Beating the Odds: Lowe’s Companies Inc. (LOW)

Lowe’s Companies Inc. (NYSE: LOW) stock fell -1.08% on Friday to $188.36 against a previous-day closing price of $190.41. With 2.88 million shares changed hands, the volume of the stock remained lighter than its average volume of 3.67 million shares. During the session, the Home Improvement Retail company that operates in wider Consumer Cyclical sector, reached to the highest price of $194.80 whereas the lowest price it dropped to was $188.32. The 52-week range on LOW shows that it touched its highest point at $263.31 and its lowest point at $170.12 during that stretch. It currently has a 1-year price target of $246.20. With its current market cap of 116.45 billion, LOW has annualized dividend of $4.20 while the current yield stands at 2.23%. Beta for the stock currently stands at 1.21.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of LOW was down-trending over the past week, with a drop of -2.09%, but this was down by -10.30% over a month. Three-month performance surged to 8.50% while six-month performance fell -17.56%. The stock lost -8.68% in the past year, while it has lost -27.13% so far this year. A look at the trailing 12-month EPS for LOW yields 12.68 with Next year EPS estimates of 14.50. For the next quarter, that number is 3.08. This implies an EPS growth rate of 55.30% for this year and 7.29% for next year. EPS is expected to grow by 9.40% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 28.20%.

Float and Shares Shorts:

At present, 638.00 million LOW shares are outstanding with a float of 619.97 million shares on hand for trading. On Jul 14, 2022, short shares totaled 12.39 million, which was 1.94% higher than short shares on Jun 14, 2022. In addition to Mr. Marvin R. Ellison as the firm’s Pres, CEO & Chairman, Ms. Seemantini Godbole serves as its Exec. VP & Chief Information Officer.

Institutional Ownership:

Through their ownership of 79.44% of LOW’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 39.43% of LOW, in contrast to 39.18% held by mutual funds. Shares owned by individuals account for 1.29%. As the largest shareholder in LOW with 8.68% of the stake, The Vanguard Group, Inc. holds 53,843,136 shares worth 53,843,136. A second-largest stockholder of LOW, BlackRock Fund Advisors, holds 29,677,526 shares, controlling over 4.78% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in LOW, holding 27,451,872 shares or 4.42% stake. With a 3.11% stake in LOW, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 19,304,994 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.38% of LOW stock, is the second-largest Mutual Fund holder. It holds 14,754,289 shares valued at 2.86 billion. Pershing Square Holdings Ltd. holds 1.46% of the stake in LOW, owning 9,056,888 shares worth 1.76 billion.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for LOW since 31 analysts follow the stock currently. There are 17 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 11 believe that the stock is worth HOLDING, 3 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With LOW analysts setting a high price target of $300.00 and a low target of $202.30, the average target price over the next 12 months is $246.47. Based on these targets, LOW could surge 59.27% to reach the target high and rise by 7.4% to reach the target low. Reaching the average price target will result in a growth of 30.85% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. LOW will report FY 2023 earnings on 03/01/2023. Analysts have provided yearly estimates in a range of $13.71 being high and $13.29 being low. For LOW, this leads to a yearly average estimate of $13.52. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Lowe’s Companies Inc. surprised analysts by $0.09 when it reported $4.67 EPS against a consensus estimate of $4.58. The surprise factor in the prior quarter was $0.29. Based on analyst estimates, the high estimate for the next quarter is $3.22 and the low estimate is $2.94. The average estimate for the next quarter is thus $3.08.

Summary of Insider Activity:

Insiders traded LOW stock several times over the past three months with 3 Buys and 12 Sells. In these transactions, 83,632 shares were bought while 111,016 shares were sold. The number of buy transactions has increased to 22 while that of sell transactions has risen to 28 over the past year. The total number of shares bought during that period was 354,554 while 250,895 shares were sold.

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