3. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Shareholders In Q1 2024: 60
Lowe’s Companies, Inc. (NYSE:LOW) is the well known American home improvement retailer. The average of 30 one year average analyst share price targets is $252.22, and the shares are rated Buy on average.
As of Q1 2024 end, 60 hedge funds part of Insider Monkey’s database were Lowe’s Companies, Inc. (NYSE:LOW)’s stakeholders. The fund with the most valuable stake was Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital as it owned two million shares that were worth $531 million.
Lowe’s Companies, Inc. (NYSE:LOW) forward price to earnings ratio is 18.35, which is lower than the average large-cap stock. This means that the stock might not undergo a significant correction should investor perception of home improvement stocks shift for whatever reason in the future. Over the past four years, the shares have gained roughly 85%, despite the fact that revenue growth has been in the red. The company was able to increase its earnings per share from $7.77 in 2021 to above $13 over the last 12 months. Mr. Market is confident that Lowe’s can deliver, and perhaps a higher potential contribution from professional customers to its revenue mix is responsible for the optimism.
One way in which we can check what’s going on under the proverbial ‘hood’ of a stock is to see what the hedge funds are saying. For Lowe’s Companies, Inc. (NYSE:LOW), here’s what Aristotle Capital Management, LLC had to say in its Q1 2024 investor letter:
We had previously been investors in Home Depot. Over much of the past decade Home Depot had, in our opinion, executed better than Lowe’s—expanding its presence with large professional customers and increasing its store productivity. However, with Lowe’s hiring of former Home Depot executive Marvin Ellison in 2018, we believe Lowe’s has started the process of closing the gap to better compete with its nearest rival.
The fund then proceeds to share what it believes can prove to be catalysts for Lowe’s stock in the future. According to its analysis, these include:
• Market share gains through improvements to Lowe’s supply chains, upgraded IT systems and enhanced omnichannel sales, which include “buy online, pick up in store” purchases;
• Increased share gains with professionals due to the company’s renewed focus on offering products and services for this larger-scale customer base (Lowe’s estimates a professional make ~70 store visits per year versus just ~4 per year for a “do-it-yourself” customer); and
• Increased profitability and sales per square foot of retail space, as the company has shifted its focus from geographical expansion toward improving store efficiency.
