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Once Again, Lowe's Is An Attractive Buy

Apr. 03, 2022 1:39 AM ETLowe's Companies, Inc. (LOW)HD21 Comments
Khen Elazar profile picture
Khen Elazar


  • Lowe's, a dividend king with a long track record of dividend increases.
  • Lowe's saw its share price declining by 20% in the last several months.
  • At the current price, Lowe's is a buy for dividend growth investors.
Lowe"s store in Toronto, Canada.

JHVEPhoto/iStock Editorial via Getty Images


As a dividend growth investor, I am constantly looking for additional dividend growth opportunities for my portfolio of ~70 dividend growth companies. While I am looking for possible additions of new positions, I am also adding to my existing positions whenever I believe

This article was written by

Khen Elazar profile picture

Analyst’s Disclosure: I/we have a beneficial long position in the shares of LOW, TGT, WMT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

Chris Lau profile picture
I am bearish on $LOW since 02/2022 and will upgrade to BUY at $166.
Bullish on $COST, $WMT, $TGT.
how do you see the risk for LOW if we are really in a housing bubble?
I plan to add LOW to my portfolio, but frankly, I am not sure it is done dropping after a big run up. May decide to establish a small tracking position to hedge my bets a little, but I need to see a bit of a plateau for some period first. Likely weak this year, IMO.
I agree at the current price, Lowe's is a buy for dividend growth investors. I bought shares today at slightly less than $201 a share. A great addition to this sector of the market.
I am getting interested in this dividend king. I didn't know it was one until reading your article, so thank you.

Home improvement stores over here in Germany are facing extreme competition, many go bankrupt and margins are razor thin. It looks like the effective duopoly in the US allows for better margins and healthy profits.

I may initiate a first position soon. Or I buy Starbucks, another American Icon.
Chowder profile picture
With regard to analysts: they are similar.

LOW - 61 Buy or Strong buy - 20 Hold - 0 Sell.
HD - 67 -21 - 2

Close enough not to matter.

Under the current condition of the market, where inflation and higher interest rates are going to have an effect on companies, earnings growth is going to be very important.

Earnings Growth:

LOW - double digits going forward 13% in the coming year and 11% following.
HD - 3% in the coming year (they guided lower) and 8% following.

LOW wins.

As to valuations:

LOW - M* says FV is $203 and CFRA says $225.03. LOW currently at $202.40 so considered selling at a discount.

Using Discount Cash Flow (DCF) analysis, in looking at the Intrinsic Value for LOW, the Base rate is $239.76 so the current price indicates LOW is selling at a 16% discount to FV.

HD - M* says FV is $255.00 and CFRA says $295.00. HD currently at $301.89 so considered overvalued, selling at a premium to FV.

In looking at the Intrinsic Value for HD, the Base rate is $256.52 so the current price indicates a 15% premium to FV.

LOW wins!

I suppose if one is simply focused on the yield, then HD wins, but again if total return is the objective, LOW wins in my opinion based on Wall St. projections and current valuations.
Both HD and LOW are good buys now. They both have had a significant pullback.
Dividend Pro profile picture
$LOW is up roughly 350% since the 2020 lows. So it WAS a great buy. Not so much anymore.

Between $HD and $LOW, I would pick HD everytime. Better stores, better staff, and better lightning so it does not look dingy like LOW, at least in the surrounding 3 states (WA, BC, AB). But LOW has items I can not get at HD, so I still reluctantly have to go there. It has a place in the market.

Long HD.
damcooldav3 profile picture
@Dividend Pro I used to like Home Depot more, but Lowes is now my preferred locally. I also like the upgrades to Lowes app on my phone. Lowes has better growth potential and an excellent CEO.
I prefer Lowes, personally.
LOW is currently at a 1.48% Yld, I would consider purchasing it only at ~~2.0%.
I just left Lowes packed ! Shoppers love Lowes, contractors love Lowes . Everyone has this one wrong but that makes it the best time to stock up on LOW . This is the USA we shop shop shop and when we dont buy homes we fix them up , when we buy homes we shop at Lowes .
Opening new stores in locations that are starting to grow in population. The Lowes employees just seem so much more in tune compared to HD. I went to a HD truly felt like I was bugging the help and they are all on drugs or something
Wapiti19 profile picture
I missed the Lowes boat at 166…sigh…
@Wapiti19 Man, $LOW dropped below $80 in Mar 2020…I was gonna load the boat at $79, then it went over $80, and I decided to wait for it to go sub $80 again…the rest is history…*major sigh*
WISRJS profile picture
I own LOW stock and like the company but I believe that it needs to develop an online presence to be able to offer a wider selection of certain items which they cannot do in the regular store. Otherwise they will lose this business to Amazon and other online sites.
damcooldav3 profile picture
@WISRJS they are doing that now, also changing their distribution process to be more efficient lowering their costs.
rickevantodd profile picture
Excellent article. I do not own either LOW or HD. I am a retired investor living off my income, therefore, I will not initiate a position at this time. I would reconsider when a recession hits if the shares sold off dramatically.
party2998 profile picture
Just added 100 shares at $204.-. Also invested in TGT.
damcooldav3 profile picture
@party2998 both high on my watchlist, good for you.
Lowe’s has been a good position for me over the past year, even with the drop I’m still up 100%

Should really have added during the initial COVID dip.
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