June 26, 2018

LOW – Market expectations are for continued Uniform ROA expansion, but management has concerns about their Pro customers, seasonality, and comps


  • Lowe’s Companies, Inc. (LOW:USA)currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 22.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their Pro customers, seasonality, and comps
  • Specifically, management may have concerns about their relationships with Pro customers, and may be concerned about the seasonality of their business, particularly as a result of the prolonged unfavorable weather conditions they faced across geographies during the quarter. Additionally, they may have concerns about their cash balance, and may lack confidence in the sustainability of above-average comps in lumber and building materials, tools, and hardware and millwork
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