Is Lowe’s a Good Investment?

PHOTO CREDIT: Lowe’s

OVERVIEW

Lowe’s Companies Incorporation operates thousands of home improvement and hardware stores across the United States, Mexico, and Canada. In these stores, they offer hardware like a wide variety of tools, garden supplies, electrical parts, home improvement products, and other building materials. The company was founded and is currently based in the United States.

Why You Should?

  1. The COVID-19 Pandemic has boosted the sales of this home improvement giant. As people stay at home, they are more likely to undertake home improvement projects and other remodeling efforts as they have more time. For example, consumers spent more on remodeling during this time which benefited Lowe’s, which reported strong quarterly results due to the shift in consumer trends.
  2. Lowe’s has upside due to strong long term goals. For example, the company has developed a formidable e-commerce platform that has seen a spike in demand during these tough times as consumers demand more of its product for home delivery. Millennials are also thinking about their homes as investments and are more likely to remodel. This will help the company into the future of remodeling and home improvement.
  3. The wildfires, hurricanes, and other natural disasters are unfortunate, but consumers need a way to rebuild after these devastating events. Lowe’s offers consumers a streamlined way to repair and prepare their homes before and after natural disasters occur. For example, before a hurricane, Lowe’s will see a rise in demand for lumber as individuals board up to prevent damage.
  4. Lowe’s will benefit as the economy gains strength and the housing market booms in some areas again. As consumers have more money in their pockets, they are more likely to buy new homes or remodel their own. Both of these events will benefit the company’s strong home building and renovation business.
  5. Lowe’s has seen a rise in revenues and profits over the past couple of financial years as the company sees strong demand for all of its products due to the reasons mentioned above. This will help the company’s future growth and will also aid them to build a stronger balance sheet. In the financial year of 2020, the company reported revenues of around 72.15 billion and profits of around 4.3 billion. In the financial year of 2019, the company reported revenues of around 71.3 billion and profits of around 2.3 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. Lowe’s faces tough competition from several large companies. Amazon, Home Depot, and ACE Hardware offer products that directly compete with the ones that Loew’s offer to their consumers. Other traditional retailers like Walmart also offer similar products. This might hurt the company in the future.
  2. Lowe’s has a cyclical business. During the spring and summer months, they see a spike in demand due to gardening and home improvement projects and they see weaker demand in fall and winter months due to the weather and other factors that make conditions tough to take on large projects. This might hurt the company in the future.

MY OPINION

In my opinion, I think that Lowe’s is a retailer that will continue to grow during tough economic times and during times which other retailers like Macy’s are going bankrupt. This is due to strong current and future demand, a strong economy, and the housing market, as well as a strong balance sheet. However, competition and a cyclical business might hurt the company in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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