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Lowe's Companies, Inc. (NYSE:LOW) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$178 at one point, and dropping to the lows of US$147. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Lowe's Companies' current trading price of US$161 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Lowe's Companies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Lowe's Companies
What is Lowe's Companies worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.59% above my intrinsic value, which means if you buy Lowe's Companies today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $146.47, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Lowe's Companies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Lowe's Companies look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 43% over the next couple of years, the future seems bright for Lowe's Companies. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? LOW’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?