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Lowe's (LOW) Stock Sinks As Market Gains: What You Should Know

Lowe's (LOW) closed at $93.96 in the latest trading session, marking a -1% move from the prior day. This change lagged the S&P 500's 0.22% gain on the day. Elsewhere, the Dow gained 0.59%, while the tech-heavy Nasdaq added 0.16%.

Coming into today, shares of the home improvement retailer had gained 3.77% in the past month. In that same time, the Retail-Wholesale sector gained 1.88%, while the S&P 500 gained 0.49%.

LOW will be looking to display strength as it nears its next earnings release, which is expected to be February 27, 2019. The company is expected to report EPS of $0.80, up 8.11% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $15.73 billion, up 1.55% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.11 per share and revenue of $71.40 billion. These totals would mark changes of +16.4% and +4.05%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for LOW. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.04% higher. LOW is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, LOW is currently trading at a Forward P/E ratio of 18.56. For comparison, its industry has an average Forward P/E of 11.1, which means LOW is trading at a premium to the group.

We can also see that LOW currently has a PEG ratio of 1.32. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Building Products - Retail was holding an average PEG ratio of 1.09 at yesterday's closing price.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 208, which puts it in the bottom 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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