Options Trade of the Week 
Lowe's Companies, Inc. (NYSE:LOW) Calls 
Sunday, February 22, 2015

**OPTIONS TRADE OF THE WEEK: Buy the LOW Jul 2015 75.000 call (LOW150717C00075000) at or under $3.30, good for the day. Place a protective stop limit at $1.30 and a pre-determined sell at $5.50.


by Ian Harvey

February 22, 2015



Lowe's Companies, Inc. (NYSE: LOW), a home improvement retailer with 1,745 stores representing approximately 197 million square feet of retail selling space (as of February 3rd, 2012), will report its fourth-quarter results on February 25th . The company will release its quarterly numbers before the market opens, with analysts forecasting earnings of 44 cents per share, up from 31 cents during the same period last year. The stock is up 5.4% this year.

Improvements in the housing market have helped Lowe's in recent years, and for the most part the housing recovery remains intact. The housing market also is in a continuous process of improvement, side by side with the home improvement industry. As a result, analysts have forecast 42% year-over-year earnings growth, and they expect the trend to continue, with 23% earnings growth next year.

Technical Oulook

Technical indicators for LOW are bullish and the stock is in a strong upwards trend.

Lowe's Companies has a 52-week low of $44.13 and a 52-week high of $72.85. The stock’s 50-day moving average is $69.44 and its 200-day moving average is $59.83.

The company has a market cap of $70.020 billion and a price-to-earnings ratio of 28.69.


Lowe's Companies last released its earnings data on Wednesday, November 19th. The company reported $0.59 EPS for the quarter, beating the Thomson Reuters consensus estimate of $0.58 by $0.01. The company had revenue of $13.70 billion for the quarter, compared to the consensus estimate of $13.56 billion.

During the same quarter in the prior year, the company posted $0.47 earnings per share. The company’s quarterly revenue was up 5.6% on a year-over-year basis. Analysts expect that Lowe's Companies will post $2.67 EPS for the current fiscal year.

Positive Factors for LOWES!

1. Where the home improvement industry is concerned, no doubt Lowe’s is leading. Home Depot is the only rival, which was downgraded from a Zacks Rank number 2 to Zacks Rank number 3 last week. Lowes has a balance budget, with a debt to equity ratio of approximately 1.01.

2. Lowe’s had its Zacks Ranking lifted from 3 to 2. This means that positive results are expected from Lowe’s. The annual growth calculations of the current Q show 40.78%.

3. Lowes EPS annual growth is 15.73, however the beta is low at 1.18, but a dividend of 1.35% makes it more secure at low volatility stock.

4. Last trading session saw Lowes Companies, Inc. experience a large inflow of money, but dropped -0.32% or -0.23 points to trade at $72.29 per share. As per the latest trading data available, the net money flow stood at $3.09 million as the counter received $34.86 million in upticks and gave away $31.77 million in downticks. The final up/down ratio was at 1.1, which is a very positive sign and conveys that long positions are being made. On a weekly basis, the stock has appreciated by 0.33%.

Analysts Opinions

Lowes has experienced a number of positive research reports recently, these are as follows:-

• Analysts at Jefferies Group reiterated a “hold” rating and set a $69.00 price target (up previously from $62.00) on shares of Lowe's Companies in a research note on Thursday, February 12th.

• Analysts at Morgan Stanley upgraded shares of Lowe's Companies from an “equal weight” rating to an “overweight” rating and set a $80.00 price target on the stock in a research note on Wednesday, January 21st.

• Analysts at Deutsche Bank raised their price target on shares of Lowe's Companies from $68.00 to $73.00 and gave the company a “buy” rating in a research note on Thursday, January 8th.

• Finally, analysts at Goldman Sachs initiated coverage on shares of Lowe's Companies in a research note on Friday, December 26th. They set a “buy” rating on the stock.

Shares of Lowe's Companies have received a consensus rating of “Buy” from the twenty brokerages that are covering the company, American Banking and Market News reports. Eight research analysts have rated the stock with a hold rating and eleven have assigned a buy rating to the company. The average twelve-month price target among analysts that have issued a report on the stock in the last year is $66.89.


Lowe's has topped analyst estimates each of the last three quarters, therefore it is expected that another upbeat report is due for the fourth-quarter, with the stock trading up to a new record high following the news.

Therefore, based on the facts above the following options trade is recommended…..

**OPTIONS TRADE OF THE WEEK: Buy the LOW Jul 2015 75.000 call (LOW150717C00075000) at or under $3.30, good for the day. Place a protective stop limit at $1.30 and a pre-determined sell at $5.50.

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