What Investors Should Know About Lowe’s New “Total Home” Approach

Lowe’s adds new $15 billion stock repurchase program to its existing program

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Lowe's Companies, Inc. (NYSE:LOW) is the second0largest home improvement retail company, only trailing Home Depot (HD). The company recently unveiled its new strategy to drive market share acceleration, a “Total Home” strategy that would focus heavily on customer engagement, expand the online business, modernize installation services, improve localization efforts, and elevate their product assortment.

In addition to these new plans, the company’s Board of Directors recently authorized a new $15 billion common stock repurchase program. This repurchase program has no expiration date and adds to the previous program's balance, which was $4.7 billion as of Dec. 8.

What has this done for Lowe's stock? Well, since a Oct. 16 record high of $180.67, LOW has consolidated below the $170 level. Nevertheless, there's chart support in place at its 160-day moving average, and the stock remains up 80% in the last nine months. 

LOW Stock Chart

The retailer beat expectations on three of its last four of its earnings reports released in 2020. However, this only resulted in marginal post-earnings moves at best, and an 8.2% drop after its November quarterly report. Overall, in the last eight reports, LOW has averaged a 5.2% post-earnings move, regardless of direction.

Lowe's stock also has a forward dividend of $2.40 and a forward dividend yield of 1.44%. LOW’s last dividend was for $0.60 per share that was paid out to investors. The company have paid a dividend since 1980.

Lowe’s saw its revenue growth slow down over this past year, but the company had grown its top line by about $7 billion between 2017 and 2020. On the other hand, though, Lowe’s has struggled a bit more with its bottom line, losing over $1.3 billion in net income these past 12 months, bringing their its net profits to $2.9 billion. In addition, Lowe’s saw a significant decline in net income for the fiscal year 2019.

Nonetheless, Lowe’s has a solid upward trajectory for its revenue and net income, looking fairly sound from a fundamental perspective. Lowe's stock also has a very appealing forward price-earnings ratio of 17.99. This figure is down significantly from LOW's current price-earnings ratio of 23.91.

 

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