Tread Carefully When It Comes To Lowe’s Companies, Inc. (LOW)

Despite closing 2.59 points higher on 12 February, Lowe’s Companies, Inc. (NYSE:LOW) remains a key investment for many, but the stock is also a popular trading vehicle. Here’s how to trade it using charts and trading levels Wednesday. The shares accumulated 2.67 percent at $99.47 with a light trade volume of 3.553 million shares. After opening the session at $97.55, the shares went as high as $99.89 and as low as $97.26, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $80.2 billion and now has 806 million shares outstanding. Lowe’s Companies, Inc. (LOW) stock has gained 2.23 percent of market value in 21 trading days.

LOW stock has a trailing 3-year beta of 1.25, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $4.52 a share in the trailing twelve months. The stock’s value has surged 7.7 percent year to date (YTD) against a rise of 2.37 percent in 12 month’s time. The company’s shares still trade -15.49 percent away from its 1-year high of $117.70 and 22.56 percent up from 52-week low of $81.16. The average consensus rating on the company is 2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Lowe’s Companies, Inc. (LOW) will probably climb 11.41 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $128 price as 12-month high target. This represents a whopping 28.68 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $110, which represents a return potential of 10.59 percent when compared to the closing price of the stock of $99.47 on Tuesday, February 12. The lowest price target for the stock is $95 — slightly more than -4.49 percent from LOW’s current share price.

History has shown that shares in Lowe’s Companies, Inc. have gone down on 19 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. Investors will get their next glimpse of LOW’s Q4 earnings on February 27. Analysts are forecasting revenue to climb 1.7 percent to $15.8B in the fiscal fourth quarter, while earnings are seen soaring by nearly 8.11 percent to $0.8 per share. It earned $1.04 per share, better than the $0.98, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $17.4B, in line with the $17.4B analysts expected. Earnings are estimated to increase by 18.4 percent this year, 17.99 percent next year and continue to increase by 15.27 percent annually for the next 5 years.

Let’s take a look at some insider activity at Lowe’s Companies, Inc. (NYSE:LOW) and see the pattern. The earliest insider trade took place on 11/23/2018. Rogers Brian C gathered a total of 10 thousand shares of company at average share price of $88.02. The total for the purchase was set at $880.2 thousand. After this transaction, the Director account balance stood at 10 thousand shares. The stock grew 13.01 percent since that insider purchase. On 09/18/2018, Croom Marshall A, EVP, CFO, sold 15.74 thousand shares at a price per share of $114.61. This removed 1.8 million shares from the insider’s fortune and the stock saw a -13.21 percent retreat in value since the news became public. This transaction left 45.65 thousand shares in the EVP, CFO account.

On 08/24/2018, Director Wardell Lisa W performed a purchase transaction worth $29.41 thousand. This purchase at $107.72 each has added 0.27 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded -7.66 percent decrease since the transaction was reported. The insider now is left with 0.27 thousand shares remaining in the account. Hollifield Matthew V, who performs the SVP Chief Accounting Officer job, sold 12.36 thousand shares for $1.23 million. The disposal occurred on 06/08/2018 was priced at $99.56 per share. The share price plunged -0.09 percent since the reporting date. Hollifield Matthew V now left with a stake of 27.03 thousand LOW stock worth $2.69 million after the insider selling.

The stock is currently hovering around the first support level of $97.86. Below this, the next support is placed in the zone of $96.24. Till the time, the LOW stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 63.56 on daily chart, which may remain a cause for concern. If the price breaks below $96.24 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $100.49 mark may result into a pull-back move towards $101.5 level.

Shares of Lowe’s Companies, Inc. (LOW) are trading at a P/E ratio of 21.42 times earnings reported for the past 12 months. The industry LOW operates in has an average P/E of 31.69. Its P/E ratio went as low as 21.09X and as high as 26.27 over the 5-year span.Further, it is sporting a 1.13 on the Price-to-Sales ratio. Compare this with the industry average P/S of 5.28. 33.9 percent is the gross profit margin for Lowe’s Companies, Inc. and operating margin sits at 8 percent. Along with this, the net profit margin is 5.2 percent.