On Tuesday, Stifel kept its Hold rating on Lowe's Companies Inc. (NYSE:LOW) with a steady price target of $265.00. The firm's stance comes after Lowe's reported its third-quarter earnings for fiscal year 2024. While sales for the home improvement retailer surpassed expectations, Stifel holds a cautious view on the company's performance, attributing some of the sales success to an extended season and benefits from recent hurricanes.
Lowe's third-quarter results sparked a mixed reaction, as the sales boost did not signify a significant positive shift in the company's trajectory. Stifel's forecast for fiscal year 2025's comparable sales remains unchanged, suggesting a conservative outlook on the retailer's future growth.
The company's guidance for fiscal year 2024 has raised some concerns among analysts. Despite projecting $300 million more in revenue, Lowe's anticipates $46 million less in earnings before interest and taxes (EBIT). This revision has prompted closer examination of Lowe's capacity to handle increased demand, especially in light of the company's mention of unique expenses and lower-margin hurricane-related sales, which are estimated at $200 million.
Lowe's financial guidance, which factors in these unique expenses and hurricane impact, has not altered the overall cost outlook for the company. This detail is particularly noteworthy as it suggests Lowe's is facing challenges in balancing cost management with the pursuit of revenue growth.
In summary, Stifel's reiteration of the Hold rating and $265.00 price target reflects a cautious approach to Lowe's stock, taking into account the recent earnings report and the company's guidance for the upcoming fiscal year. The analysis indicates that while Lowe's has experienced a sales increase, there are underlying concerns about its profitability and ability to sustain demand without compromising margins.
In other recent news, Lowe's Companies Inc. reported adjusted earnings per share (EPS) of $2.89 for the third quarter of 2024, surpassing both Goldman Sachs and consensus estimates. The company's net sales saw a slight year-over-year decline of 1.5%, totaling $20.2 billion, yet this still exceeded Goldman Sachs' projection and the consensus estimate. The company has updated its 2024 earnings per share guidance to a range of $11.80 to $11.90, aligning with current street estimates.
Multiple financial firms, including TD Cowen, Loop Capital, and Telsey Advisory Group, have adjusted their price targets for Lowe's, with TD Cowen raising its target to $290, Loop Capital to $250, and Telsey Advisory Group to $275. Additionally, Oppenheimer upgraded Lowe's stock from Perform to Outperform, increasing its price target to $305.
InvestingPro Insights
Lowe's Companies Inc. (NYSE:LOW) presents a mixed picture for investors, as reflected in recent InvestingPro data and tips. The company's market capitalization stands at $147.55 billion, underscoring its significant presence in the Specialty Retail industry. Lowe's P/E ratio of 21.68 suggests that the stock is trading at a premium compared to its near-term earnings growth potential, which aligns with Stifel's cautious Hold rating.
Despite the challenges highlighted in the earnings report, Lowe's has demonstrated resilience in its dividend policy. An InvestingPro Tip reveals that the company has raised its dividend for 41 consecutive years, indicating a strong commitment to shareholder returns. This is further supported by a current dividend yield of 1.69% and a dividend growth rate of 4.55% over the last twelve months.
The company's financial health appears stable, with InvestingPro data showing a revenue of $84.02 billion and an operating income of $10.48 billion over the last twelve months. However, the revenue growth of -9.87% during this period aligns with the concerns raised about Lowe's ability to sustain growth without impacting profitability.
For investors seeking a deeper understanding of Lowe's financial position and future prospects, InvestingPro offers 7 additional tips that could provide valuable insights into the company's investment potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.