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Lowe's (LOW) Digital & Pro Businesses Appear Encouraging

·4-min read

Lowe's Companies, Inc. LOW appears good on the back of constant investments in the technology and merchandise category as well as sturdy Pro and digital businesses. LOW’s Total Home strategy, which includes complete solutions for various home improvement needs, also bodes well.

The Zacks Consensus Estimate for Lowe’s sales and earnings per share (EPS) is currently pegged at $97.9 billion and $13.49, respectively. These estimates suggest growth of 1.7% and 12%, respectively, from the year-ago period’s corresponding figures. This raises analysts’ optimism about the stock. A VGM Score of A coupled with a projected long-term earnings growth rate of 12.6% for this Zacks Rank #3 (Hold) further speaks volumes.
This renowned home-improvement retailer’s stock has gained 0.9% in the past three months, outperforming the industry’s 9.8% decline.

Detailing Strategies

Strong digital base has been aiding Lowe’s performance for a while. Management continues making investments in omni-channel capabilities to drive growth. These areas include expanding online assortment, boosting user experience and improving fulfillment. First, the company is expanding its assortment to meet customers' design and lifestyle needs. Management is focused on enhancing the omni-channel retailing capabilities in store operations, website and supply chain, with an aim to resonate well with the customers’ demand to shop.

During the first quarter of fiscal 2022, sales at increased above 36% on a two-year basis. This represents about 10% sales penetration. Management is on track with advancing its same-day and next-day fulfillment capabilities. It constantly pilots various gig network solutions, such as partnering with Instacart across many markets with the same-day DIY home delivery. Management had launched Lowe's One Roof Media Network and looks forward to boosting digital advertising.

Pro customers have been a significant driver in Lowe's business growth. Moreover, in a bid to continue augmenting sales from pro customers, the company has been augmenting pro-focused brands. Earlier, Lowe’s had refurbished its pro-service business website,, to give special attention to the needs of its Pro-customers. In fact, continued focus on the Pro category is a very significant component of the Total Home strategy. During the fiscal first quarter, pro sales jumped 20% year over year and 64% on a two-year basis.

Management is quite focused on enhancing the Pro offering across the company’s stores and online with improved service levels, more expansive inventory quantities, intuitive store layout and more Pro national brands. The Pro segment is expected to continue its momentum with improved in-stock inventory levels, enhanced service offerings and the new Pro loyalty program. Management is focused on expanding service levels in-store and online to cater to the needs of Pro customers.

All in all, given the above-discussed factors, Lowe’s is well poised for growth in the future.

Solid Picks in Retail

Some other stocks in the broader Retail sector that investors can consider are Boot Barn Holdings BOOT, Capri Holdings CPRI and Fastenal FAST.

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, presently has a Zacks Rank of 1 (Strong Buy). BOOT has an expected EPS growth rate of 20% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 17% and 4.4%, respectively, from the year-ago corresponding figures. BOOT has a trailing four-quarter earnings surprise of 25.2%, on average.

Capri Holdings, which offers accessories and footwear, carries a Zacks Rank #2 (Buy) at present. CPRI has an expected EPS growth rate of 11.3% for three-five years.

The Zacks Consensus Estimate for Capri Holdings’ current financial year sales and EPS suggests growth of 5.3% and 10%, respectively, from the year-ago corresponding figures. CPRI has a trailing four-quarter earnings surprise of 49.3%, on average.

Fastenal, a national wholesale distributor of industrial and construction supplies, currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 5%, on average.

The Zacks Consensus Estimate for Fastenal's current financial-year sales and earnings per share suggests growth of 15.4% and 16.3%, respectively, from the year-ago period. FAST has an expected EPS growth rate of 9% for three-five years.

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