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Can Lowe’s Continue to Dominate, Post-Pandemic?

Lowe's Companies (NYSE:LOW), has definitely benefitted from the pandemic. Lowe's operates as a home improvement retailer with 1,974 stores globally. With people stuck at home, many...
Can Lowe’s Continue to Dominate, Post-Pandemic? © Reuters. Can Lowe’s Continue to Dominate, Post-Pandemic?

Lowe's Companies (NYSE:LOW), has definitely benefitted from the pandemic. Lowe's operates as a home improvement retailer with 1,974 stores globally. With people stuck at home, many decided to work on renovations.

Before the pandemic, Lowe's was accustomed to seeing single-digit revenue growth. Thanks to pandemic-related changes to daily activities, revenues grew by 24.2% in 2020, while earnings saw growth of 41.2%.

However, it is likely that the company will return to single-digit growth once things go back to normal. As a result, we are neutral on Lowe's. (See Lowe's stock charts on TipRanks)

Lowe's Growth Catalysts

The home improvement retail industry is expected to grow at a CAGR of 3% during the forecast period of 2021 to 2026. Although this doesn't sound exciting, it shows that the industry is healthy.

Lowe's controls about 12% of the market, with its main competitor, Home Depot (NYSE:HD), controlling 17%. What's interesting is the fact that the 2 companies combined have only a 29% market share. Considering how dominant they are, we expected a much larger share. As it turns out, the industry is quite fragmented, meaning it is a highly competitive market that lacks highly dominant players. Among Lowe's larger competitors are Menard Inc., Walmart Inc. (NYSE:WMT), and ADEO.

This fragmentation gives larger players such as Lowe's a competitive edge over the smaller rivals. With more money to reinvest than smaller competitors, Lowe's earnings growth will likely outpace the industry growth of 3% and continue capturing more market share.

In addition, when organic growth begins to slow down, Lowe's would be able to use its cash flows to acquire smaller competitors. Thus, it could act as an industry consolidator going forward, should it choose to do so.

Risks for Lowe's

Purchasing a home is a big commitment for a buyer. The real estate market has been hot and the amount of money needed to purchase a home continues to increase. Therefore, a lot of new homeowners are likely tying up a lot of money.

We see 2 potential risks for Lowe's. The first is that the more money that is tied up in simply purchasing a home, the less the amount left over to spend on home renovations. Nonetheless, this doesn't appear to be a concern so far, as earnings are expected to continue growing.

The second risk we see is the potential for a slowdown in the housing market. This scenario could potentially cause people to reduce the amount of money they invest in their homes.

On the other hand, according to RBC, home equity levels are at an all-time high, and equity usage has been dropping for 10 years straight. Thus, people are deleveraging, meaning that the main cause of rising real estate prices is supply and demand. This is in stark contrast to the irresponsible lending practices that took place in the 2000's.

Wall Street’s Take

Turning to Wall Street, Lowe's has a Moderate Buy consensus rating, based on 7 Buys, 1 Hold and 0 Sells assigned in the last three months. The average Lowe's price target implies 11.3% upside potential.

Final Thoughts

Lowe's is a great company with a dominant position in its industry. However, a likely return to single-digit growth might slow down the stock's future returns.

Disclosure: At the time of publication, Stock Bros Research did not have a position in any of the securities mentioned in this article.

​Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.

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28-09-2021 01:16:51 (UTC+7)

EUR/USD

1.1708

-0.0006 (-0.06%)

Summary

Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (5)

Sell (1)

EUR/USD

1.1708

-0.0006 (-0.06%)

Summary

Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (5)

Sell (1)

GBP/USD

1.3712

+0.0029 (+0.22%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (9)

Sell (0)

USD/JPY

110.96

+0.24 (+0.22%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (8)

AUD/USD

0.7289

+0.0031 (+0.43%)

Summary

Neutral

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (2)

Sell (5)

USD/CAD

1.2619

-0.0033 (-0.26%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (4)

Sell (2)

EUR/JPY

129.92

+0.22 (+0.17%)

Summary

Sell

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (1)

Sell (7)

EUR/CHF

1.0834

+0.0011 (+0.10%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (5)

Sell (2)

Gold Futures

1,751.80

+0.10 (+0.01%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (1)

Sell (8)

Silver Futures

22.677

+0.252 (+1.12%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (5)

Sell (3)

Copper Futures

4.2830

-0.0025 (-0.06%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (4)

Sell (2)

Crude Oil WTI Futures

75.55

+1.57 (+2.12%)

Summary

Sell

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (2)

Sell (7)

Brent Oil Futures

78.81

+1.58 (+2.05%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (2)

Sell (5)

Natural Gas Futures

5.639

+0.439 (+8.44%)

Summary

Neutral

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (2)

Sell (3)

US Coffee C Futures

194.98

+0.63 (+0.32%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (5)

Sell (0)

Euro Stoxx 50

4,165.48

+6.97 (+0.17%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

S&P 500

4,451.77

-3.71 (-0.08%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (1)

DAX

15,573.88

+42.13 (+0.27%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (8)

FTSE 100

7,063.40

+11.92 (+0.17%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (7)

Hang Seng

24,208.78

+16.62 (+0.07%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (8)

Sell (0)

US Small Cap 2000

2,295.55

+41.67 (+1.85%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (0)

IBEX 35

9,002.90

+129.80 (+1.46%)

Summary

Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (4)

Sell (2)

BASF SE NA O.N.

64.740

+1.040 (+1.63%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (5)

Bayer AG NA

47.47

+0.99 (+2.13%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (0)

Allianz SE VNA O.N.

196.19

+3.85 (+2.00%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (2)

Adidas AG

278.80

-2.77 (-0.98%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (10)

Deutsche Lufthansa AG

6.561

+0.328 (+5.26%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (7)

Sell (2)

Siemens AG Class N

147.27

-0.84 (-0.57%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (10)

Deutsche Bank AG

11.120

+0.285 (+2.63%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (5)

Sell (3)

 EUR/USD1.1708Buy
 GBP/USD1.3712↑ Buy
 USD/JPY110.96↑ Sell
 AUD/USD0.7289Neutral
 USD/CAD1.2619Neutral
 EUR/JPY129.92Sell
 EUR/CHF1.0834↑ Buy
 Gold1,751.80↑ Sell
 Silver22.677Neutral
 Copper4.2830Neutral
 Crude Oil WTI75.55Sell
 Brent Oil78.81Neutral
 Natural Gas5.639Neutral
 US Coffee C194.98↑ Buy
 Euro Stoxx 504,165.48↑ Sell
 S&P 5004,451.77↑ Buy
 DAX15,573.88↑ Sell
 FTSE 1007,063.40↑ Sell
 Hang Seng24,208.78↑ Buy
 Small Cap 20002,295.55↑ Buy
 IBEX 359,002.90Buy
 BASF64.740↑ Sell
 Bayer47.47↑ Buy
 Allianz196.19↑ Buy
 Adidas278.80↑ Sell
 Lufthansa6.561↑ Buy
 Siemens AG147.27↑ Sell
 Deutsche Bank AG11.120↑ Buy
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank5,665/ 5,715
(0/ 0) # 900
SJC HCM5,635/ 5,700
(0/ 0) # 885
SJC Hanoi5,635/ 5,702
(0/ 0) # 887
SJC Danang5,635/ 5,702
(0/ 0) # 887
SJC Nhatrang5,635/ 5,702
(0/ 0) # 887
SJC Cantho5,635/ 5,702
(0/ 0) # 887
Cập nhật 28-09-2021 01:16:54
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ↀ Giá vàng thế giới
$1,751.63+2.140.12%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-IV2204022480
RON 95-II,III2194022370
E5 RON 92-II2071021120
DO 0.05S1658016910
DO 0,001S-V1693017260
Dầu hỏa1564015950
ↂ Giá dầu thô thế giới
WTI$75.45-0.75-1.01%
Brent$78.84-0.83-1.07%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.630,0022.860,00
EUR25.993,7727.346,60
GBP30.324,2231.591,18
JPY200,45212,05
KRW16,7520,39
Cập nhật lúc 18:54:42 27/09/2021
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