Lowe’s Gains From Home Improvement Business & Online Sales

Home renovation and maintenance activities have been gaining prominence lately, thanks to increased stay-at-home practices amid the coronavirus pandemic. The trend has been benefiting certain home improvement market players, including Lowe’s Companies, Inc. LOW. This apart, the company’s efforts to expand digital offerings is worth appreciating. These upsides were well-reflected in the company’s second-quarter fiscal 2020 results, with the top and the bottom line improving year on year. Let’s dig deeper.

Bright Prospects in Home Improvements Market

Growing inclination toward home improvement projects is quite visible in Lowe’s second-quarter fiscal 2020 results. Comparable sales (comps) for the company’s U.S. home-improvement business increased 35.1% in the second quarter, following an increase of 12.3% in the first quarter.

In the reported quarter, comps gained from sturdy project demand from DIY and pro customers across channels, product categories and geographies. It saw comps growth of more than 20% across all its merchandising divisions, while all the U.S. geographic regions posted comparable sales increase of at least 30%.

Industry experts point out that that consumer spending on home improvement products are likely to remain favorable in the near term. Safety concerns and continued work-at-home practice amid the pandemic have compelled individuals to stay inside. As a result, DIY projects for remodeling, decorating as well as maintenance of furniture and fixtures are being widely undertaken. We expect Lowe’s to keep gaining from such trends.

Digital Investments are a Key Growth Catalyst

Lowe’s is investing toward boosting its omni-channel operations for a while. When shopping preferences began witnessing a major shift with the onset of the pandemic, Lowe’s accelerated its efforts to expand digital offerings. In this context, the migration of Lowes.com to the cloud as well as the roll out curbside pickup helped the company sustain online growth.

We note that the company has been building upon its in-store technology and delivery network over the past 18 months to support elevated DIY and Pro customer demand. Markedly, sales at Lowes.com increased 135% in second-quarter fiscal 2020, as the company’s pro and DIY customers increasingly shopped online. This drove online penetration to 8% of sales.

Moreover, the company is focusing on further enhancing capabilities such as online-delivery scheduling and order tracking as well as search and navigation. Moreover, with rising demand for contactless services, Lowe’s latest investment in self-service lockers is another feather in its cap. More than 60% of the company’s online orders are picked up in stores. Hence, broadening pickup options are a worthwhile strategy for the company for creating a frictionless shopping experience for time-pressed customers.

Well Lowe’s isn’t the only company in the home improvements space striving to gain from consumers growing digital inclination. Other players such as Home Depot HD, Fastenal FAST and Beacon Roofing Supply BECN are also gaining on the back of prudent digitization efforts.

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Home Depot Looks Overvalued After 80% Gains

After an 80% rise since the March lows of this year, at the current price of around $270 per share, we believe Home Depot’s stock (NYSE: HD) has reached its near term potential. The home improvement retailer has seen its stock outperform through the coronavirus crisis, rising by almost 27% year-to-date (compared to a 2% growth in the S&P), benefiting from the stay-at-home bump. Home Depot’s stock is already about 54% higher than it was at the end of 2017. Our dashboard, What Factors Drove 54% Change in Home Depot Stock Between 2017 and Now?, provides the key numbers behind our thinking, and we explain more below.

Some of this growth over the last few years is justified by the roughly 9% increase in Home Depot’s revenues from $100.9 billion in 2017 to $110.2 billion in 2019. In addition, earnings growth, on a per-share basis, was higher by 40%. This was driven by a 160 bps net margin expansion from 8.6% to 10.2% and a 7% decline in shares outstanding during this period.

Finally, Home Depot’s P/E ratio grew from about 24x at the end of 2017 to 26x currently. The company’s P/E Multiple is yet to see a meaningful decline from the current 26x levels, which still remains 27% higher than the levels of 21x seen in 2019. We believe that the stock could remain rangebound around the current levels in the near term.

So how has Coronavirus impacted the stock?

Home Depot has remained open as an essential retailer during the pandemic restrictions and has benefited from home improvement projects. In its most recent quarter ended Aug 2, Home Depot reported revenue of $38 billion, an increase of 23% year-over-year, the retailer’s largest quarter of growth since 2002. The surge in sales helped grow net earnings to $4.3 billion in Q2, compared to $3.5 billion in the same quarter a year ago. In addition, the company also reported a comparable sales growth of 23.4%. This compares to full-year fiscal 2019 comparable sales growth of 3.5% and Q1 2020 comparable sales of 6.4%.

It should also be noted that Home Depot is in the midst of an $11 billion multiyear investment to upgrade its capabilities. The company is already benefiting by investing in technology within its stores to improve its supply chain and e-commerce shopping experience. In Q2, the retailer’s digital sales increased by approximately 100% with customers picking up 60% of those orders in-store.

Going forward, we believe the recent boost in sales might only be short-lived. As to-do items get checked off, customers are likely to decrease these spending levels in the coming quarters. This could likely be a result of a rise in unemployment and lower consumer sentiment, and its potential impact on holiday sales.

What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits,

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After Democrats’ Big 2018 Gains, More House Seats Could Flip | Pennsylvania News

By MARC LEVY, Associated Press

HARRISBURG, Pa. (AP) — In the shadow of Pennsylvania’s status as a battleground state in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two as the state’s suburbs continue to turn against President Donald Trump.

Meanwhile, Republicans are trying to defend their survivors in more evenly divided districts, while hoping to knock off some of the Democrats’ freshmen and one veteran congressman who keeps winning a district where Trump is popular.

Elections in 2018 were fruitful for Democrats: Aided by redrawn districts and anti-Trump fervor, they picked up four seats in Pennsylvania, evening the state’s partisan balance in the U.S. House and helping the party recapture the House majority overall.

There may be room for more districts to flip. Two incumbent Republicans won by fewer than 3 percentage points in 2018, while Democrats represent two districts that Trump won in 2016.

Here is a look at key races:

Second-term Republican U.S. Rep. Brian Fitzpatrick in Bucks County, just north of Philadelphia, is a top target again for Democrats: He is one of just three House Republicans in the entire country running for reelection in a district won by Democrat Hillary Clinton in 2016′s presidential contest.

But Fitzpatrick, a mild-mannered former FBI agent who took over the seat from his late brother, has a potent winning formula and is being challenged by a relative political unknown nominated by Democrats.

Fitzpatrick has his family’s name recognition and inroads into traditional Democratic voting districts. He is endorsed by top-tier labor unions and persistently uses the theme of being independent; a digital ad calls him the “No. 1 most independent congressman.”

He is the only Republican congressman in Pennsylvania who routinely votes against Trump or Republican leadership; he voted with Democrats last summer to condemn Trump for telling four Democratic congresswomen of color to “go back” to the country they came from.

He also said he has not decided whether to vote for Biden or Trump this November.

Even so, Fitzpatrick voted for Trump’s tax-cut legislation and opposed his impeachment. His opponent, Democrat Christina Finello, attacks Fitzpatrick as too weak to stand up to Trump and silent in the face of Trump’s worst transgressions.

Democrats have a 19,000-voter registration advantage in the district, which Clinton won by 2 percentage points.

But, going into July, Fitzpatrick had six times the campaign cash as Finello. And no outside groups have heavily spent to help Finello.

That’s a good sign for Fitzpatrick: He won by 2.5 points in 2018, when he was outspent nearly four-to-one by his wealthy Democratic rival and millions flowed in from outside groups.

Freshman Democrat U.S. Rep. Susan Wild is defending her Allentown-area seat against Republican nominee Lisa Scheller, a former Lehigh County commissioner who started a pigment manufacturer for paints, coatings and inks and touts her background as a recovered addict who advocates for people in recovery.

Wild, a prominent lawyer in Allentown, scored

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After Democrats’ big 2018 gains, more House seats could flip

FILE - In this Nov. 6, 2018, file photo, Rep. Conor Lamb, D-Pa, talks with reporters in Mt. Lebanon, Pa. Lamb faces Republican Sean Parnell for his seat in the 17th Congressional District of Pennsylvania. In the shadow of its battleground status in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two in Pennsylvania as the suburbs continue to turn against President Donald Trump.

FILE – In this Nov. 6, 2018, file photo, Rep. Conor Lamb, D-Pa, talks with reporters in Mt. Lebanon, Pa. Lamb faces Republican Sean Parnell for his seat in the 17th Congressional District of Pennsylvania. In the shadow of its battleground status in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two in Pennsylvania as the suburbs continue to turn against President Donald Trump.

AP

In the shadow of Pennsylvania’s status as a battleground state in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two as the state’s suburbs continue to turn against President Donald Trump.

Meanwhile, Republicans are trying to defend their survivors in more evenly divided districts, while hoping to knock off some of the Democrats’ freshmen and one veteran congressman who keeps winning a district where Trump is popular.

Elections in 2018 were fruitful for Democrats: Aided by redrawn districts and anti-Trump fervor, they picked up four seats in Pennsylvania, evening the state’s partisan balance in the U.S. House and helping the party recapture the House majority overall.

There may be room for more districts to flip. Two incumbent Republicans won by fewer than 3 percentage points in 2018, while Democrats represent two districts that Trump won in 2016.

Here is a look at key races:

____

1ST DISTRICT

Second-term Republican U.S. Rep. Brian Fitzpatrick in Bucks County, just north of Philadelphia, is a top target again for Democrats: He is one of just three House Republicans in the entire country running for reelection in a district won by Democrat Hillary Clinton in 2016′s presidential contest.

But Fitzpatrick, a mild-mannered former FBI agent who took over the seat from his late brother, has a potent winning formula and is being challenged by a relative political unknown nominated by Democrats.

Fitzpatrick has his family’s name recognition and inroads into traditional Democratic voting districts. He is endorsed by top-tier labor unions and persistently uses the theme of being independent; a digital ad calls him the “No. 1 most independent congressman.”

He is the only Republican congressman in Pennsylvania who routinely votes against Trump or Republican leadership; he voted with Democrats last summer to condemn Trump for telling four Democratic congresswomen of color to “go back” to the country they came from.

He also said he has not decided whether to vote for Biden or Trump this November.

Even so, Fitzpatrick voted for Trump’s tax-cut legislation and opposed his impeachment. His opponent, Democrat Christina Finello, attacks Fitzpatrick as too weak to stand up to Trump and silent in the face of Trump’s worst transgressions.

Democrats have a 19,000-voter registration advantage in the district, which Clinton won by 2 percentage points.

But, going into July, Fitzpatrick had six times the campaign cash as Finello. And no outside groups have heavily spent to help Finello.

That’s a good sign for Fitzpatrick:

Read more

After Democrats’ big 2018 gains, more House seats could flip

HARRISBURG, Pa. (AP) — In the shadow of Pennsylvania’s status as a battleground state in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two as the state’s suburbs continue to turn against President Donald Trump.



FILE - In this Nov. 6, 2018, file photo, Rep. Conor Lamb, D-Pa, talks with reporters in Mt. Lebanon, Pa. Lamb faces Republican Sean Parnell for his seat in the 17th Congressional District of Pennsylvania. In the shadow of its battleground status in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two in Pennsylvania as the suburbs continue to turn against President Donald Trump.  (AP Photo/Gene J. Puskar, File)


© Provided by Associated Press
FILE – In this Nov. 6, 2018, file photo, Rep. Conor Lamb, D-Pa, talks with reporters in Mt. Lebanon, Pa. Lamb faces Republican Sean Parnell for his seat in the 17th Congressional District of Pennsylvania. In the shadow of its battleground status in the presidential election, Democrats will fight to defend their gains in Congress two years ago and, possibly, add another seat or two in Pennsylvania as the suburbs continue to turn against President Donald Trump. (AP Photo/Gene J. Puskar, File)



FILE—In this file photo from June 12, 2020, Republican candidate for Pennsylvania's 17th Congressional District, Sean Parnell sits with Vice President Mike Pence, in Springdale, Pa. Parnell is looking to unseat Democrat Conor Lamb. (AP Photo/Keith Srakocic)


© Provided by Associated Press
FILE—In this file photo from June 12, 2020, Republican candidate for Pennsylvania’s 17th Congressional District, Sean Parnell sits with Vice President Mike Pence, in Springdale, Pa. Parnell is looking to unseat Democrat Conor Lamb. (AP Photo/Keith Srakocic)

Meanwhile, Republicans are trying to defend their survivors in more evenly divided districts, while hoping to knock off some of the Democrats’ freshmen and one veteran congressman who keeps winning a district where Trump is popular.

Elections in 2018 were fruitful for Democrats: Aided by redrawn districts and anti-Trump fervor, they picked up four seats in Pennsylvania, evening the state’s partisan balance in the U.S. House and helping the party recapture the House majority overall.

There may be room for more districts to flip. Two incumbent Republicans won by fewer than 3 percentage points in 2018, while Democrats represent two districts that Trump won in 2016.

Here is a look at key races:

____

1ST DISTRICT

Second-term Republican U.S. Rep. Brian Fitzpatrick in Bucks County, just north of Philadelphia, is a top target again for Democrats: He is one of just three House Republicans in the entire country running for reelection in a district won by Democrat Hillary Clinton in 2016′s presidential contest.

But Fitzpatrick, a mild-mannered former FBI agent who took over the seat from his late brother, has a potent winning formula and is being challenged by a relative political unknown nominated by Democrats.

Fitzpatrick has his family’s name recognition and inroads into traditional Democratic voting districts. He is endorsed by top-tier labor unions and persistently uses the theme of being independent; a digital ad calls him the “No. 1 most independent congressman.”

He is the only Republican congressman in Pennsylvania who routinely votes against Trump or Republican leadership; he voted with Democrats last summer to condemn Trump for telling four Democratic congresswomen of color to “go back” to the country they came from.

He also said he has not decided whether to vote for Biden or Trump this November.

Even so, Fitzpatrick voted for Trump’s tax-cut legislation and opposed his impeachment. His opponent, Democrat Christina Finello, attacks Fitzpatrick as too weak to stand up to Trump and silent in

Read more