LOW - Embedded Expectations Analysis - 2019 06 12
Lowe's Companies, Inc. (LOW:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 24.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about disruptions from merchant changes, comp sales growth, and headcount increasesSpecifically, management may be concerned about cost disruptions stemming from their transition to new merchants, their pricing strategy, and ability to attract pro customers. Moreover, they may lack confidence in their ability to sustain outdoor power equipment comp sales growth, improve quarterly performance, and meet target leverage ratios. Additionally, they may be exaggerating the capabilities of their MST and field merchandising teams, the strength of their lawn care and landscape products, and the success of their smart device and website implementations. Also, they may be concerned about the progress of their staffing system rollout, their Boomerang retail analytics acquisition, weakness in the Canadian housing market, and margin pressure related to their tools and process limitations
Lowe's Companies is a home improvement retailer. The company provides home improvement products in lumber and building materials, appliances, seasonal and outdoor living, tools and hardware, fashion fixtures, rough plumbing and electrical, paint, millwork, lawn and garden, flooring, and kitchens categories. The company provides installation services through independent contractors in product categories, including appliances, flooring, kitchens, lumber and building materials, and millwork. The company also provides extended protection plans for various products within the appliances, kitchens, fashion fixtures, millwork, rough plumbing and electrical, seasonal and outdoor living, and tools and hardware categories.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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