April 12, 2018

LOW – Market expectations are for Uniform ROA to expand past cycle-highs, but management has concerns about their sales, initiatives, and supply chain


      • Lowe’s Companies, Inc. (LOW:USA)currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 19.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their sales, initiatives, and supply chain
      • Specifically, management may lack confidence in the sustainability of sales improvements, and may have concerns about declining adjusted earnings per share. Additionally, they may be concerned about the impact of their strategic initiatives on their SG&A expenses, and may be downplaying concerns about their facilitation of repairs and maintenance services for appliances. Finally, they may lack confidence in their supply chain investments, and may be downplaying concerns about their augmented and virtual reality technologies

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