Lowes Companies - Essay Example

Lowe’s Companies, Inc. Industry Conditions Lowe’s is a home improvement retail superstore that distributes building materials and offers products and services for decorating, remodeling, repairs, and property maintenance. As a home improvement retailer, the housing market has a direct impact on Lowe’s growth. The improving economy and rebounding housing market have led to an increase in home sales. As homeowners are more likely to spend more on home improvements than renters and the bulk of the population is over 40 years old, industry analysts project home modeling to increase.

Home Depot is the primary competitor, and although a distant second, Lowes and Home Depot are clearly in another class of large-scale home improvement retail. Financial Position In terms of market value total, Lowe’s is valued at over 66 billion dollars, which is a little under half the valuation of Home Depot. All other competitors are valued at less than 20 percent of Lowe’s. In early 2015, Lowe’s growth rate was 23.5 percent compared to 19.4 percent for Home Depot (Zacks.com, 2015). Since 2009, Lowe’s has increased revenue by eight million dollars, doubled earnings per share, almost tripled return on equity, and increased cash flow and return on assets (S&P Capital IQ, 2015).

Economic OutlookSince Lowe’s outlook is directly linked to the housing market and economy, the opportunity for growth has improved over the past 18 months. As of June 30th, BMO Capital upgraded Lowe’s from market performance to outperform and stated that Lowe’s stock is 45 percent higher than the lowest point over the last 52 weeks (Brian, 2015). Additionally, Lowe’s financial position has increased over the past six years, which was also during the late stage of the housing crash and eventual rebound.

Improvement during those times provides optimism for the current economic situation. Potential Investor Lowe’s is a three-star ranking, an A- in the earnings and dividends rank, has low volatility, and is bearish but is only 31 percent in terms of relative strength. Given the increased housing market, financial position, and economic outlook, Lowe’s is predicted to increase earnings and appears to be a solid investment opportunity. References Brian, C. (2015). Upgrade Alert for Lowes (LOW)." SmarTrend Market Maven 30 June 2015.

Business Insights: Global. Web. 2 July 2015. Retrieved from http://bi.galegroup.com.ezproxy.liberty.edu:2048/global/article/GALE|A419930355/876418cde7877f9275adfcadbfe58b3a?u=vic_libertyS&P Capital IQ, Lowe’s Cos: Company Profile. (2015, July 1). Retrieved from http://www.netadvantage.standardandpoors.com.ezproxy.liberty.edu:2048/NASApp/NetAdvantage/cp/companyFinancials.doZacks.com (2015). Is it time to buy low? 3 reasons why Lowe’s stock is poised to soar - stocks in the news. Retrieved from http://www.nasdaq.com/article/is-it-time-to-buy-low-3-reasons-why-lowes-stock-is-poised-to-soar-stocks-in-the-news-cm435236ReplyThe writer had enough emphasis on the type of business Lowe Companies, Inc. does. There was also mention of the competitors that the company has to deal with on a day-to-day basis.

It would be significant for the writer to add aspects like the location of the business and the year the company was incorporated in the industry conditions. The company was founded in 1946 with its headquarters in Mooresville, North Carolina. It has several branches in America with stores in Canada and Mexico (Sedos, 2015). The company has over 1800 stores in America alone. It is not appropriate to compare the financial position of Lowe with its competitors. The primary focus of the writer should be on the annual growth rate of the company, its revenue, and its profit margins.

Lowe was able to reduce the percentage of its expenses including administrative and general costs. The reduction in the last financial year was from 23.98% to 23.55% making the growth of the company rise from 2.3 billion US Dollars to 2.7 billion US Dollars. The emphasis on the economic outlook of the company was appropriate. The writer went into depth about the growth of the enterprise. The writer could, however, put out points about ways Lowe could adapt to the current economic situation and recessions (LCI, 2015).

The key is looking for more investors that would ensure the continuous profitability of the company. Lowe’s Companies Inc. has great potential in attracting new investors as it has been in the retail market for more than sixty years. The success of the company is evident as there is a growth of revenue and profit year after year.