Almost a year since my first ever Lowe’s (LOW) post. With the housing decline seemingly slowing, it may be time to take a closer look.
In the latest quarter ending Feb. 1, earning fell to $408 million, or 28 cents per share, from $613 million, or 40 cents per share, in the year-ago period. Sales dropped to $10.38 billion from $10.41 billion. For the year, net income declined to $2.81 billion, or $1.86 per share, from $3.1 billion, or $1.99 per share. The 6% annual EPS drop was far better than the 15% drop at Home Depot
When one considers what has happened to housing, these results are actually oustanding.
Both Home Depot (HD) and Lowe’s have curtailed expansion plans. This is good.
Also, value investor David Dreman has a position in the company.
The stock is sitting at 4 year lows and it just may be we are at the worst in housing.
I would not be surprised at all to see a nice bump from the upcoming “stimulus checks” being issue this week. I was at Lowe’s this weekend and have not seen it as packed as it was in a very long time. Perhaps people were there spending on credit cards in anticipation of paying it off after the checks come in?
Between Home Depot and Lowe’s, the latter is clearly the better run company and the stock price has held up much better over the past year down 16% vs a 22% loss for Home Depot.
Now, The Depot does have a 3% yield (vs 1.2% for Lowe’s) going for it and that cannot be overlooked. I just cannot trust management at the Depot to be wise stewards of the cash it has or not to sink it into debt to pacify impatient shareholders.
That being said, if I am going to invest in the sector, the edge has to go to Lowe’s.
Disclosure (“none” means no position):None
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One reply on “Lowe's Getting Interesting”
Also, Mark Sellers of Sellers Capital has about 25% of his fund in Lowe’s if I can remember correctly. He presented Lowe’s at the Value Investing Congress last year.