The home improvement market has generated significant growth since the start of the COVID-19 pandemic as people have been forced to spend more time at home, which has increased their interest in renovations and maintenance. of the House. In addition, the change in owners’ preferences towards modern and energy-efficient solutions encourages them to invest in sustainable restructuring and renovation works in order to limit environmental impacts. With this tailwind, the home improvement services market is expected to reach $ 585.30 billion by 2030, register a CAGR of 6.2% from 2021 to 2030.
However, there is a shortage of affordable housing in developed regions as property prices soar, encouraging homeowners to renovate their existing homes rather than moving to new ones. Additionally, renovating old, newly purchased homes before moving in is another trend that is helping the industry grow.
Against this background, we believe that established home improvement companies Lowe’s Companies, Inc. (MEUGLER) and Mohawk Industries, Inc. (MHK) could be solid bets now.
Lowe’s Companies, Inc. (MEUGLER)
Low in Mooresville, North Carolina, is a home improvement retailer in the United States and internationally. The company offers construction, maintenance, repair, renovation and decoration products.
On November 17, LOW announced a multi-year commitment to become the leading retail destination for aging-in-place and life-changing solutions with the launch of Lowe’s Livable Home. The company is also expanding its service options to clients seeking appraisals through Lowe’s associates and Lowe’s network of independent service providers. This unique destination should help LOW attract more customers and strengthen its position in the industry.
Also in November, LOW announced the upcoming launch of Measure Your SpaceBETA, an intuitive, end-to-end room scanning, measurement and estimation experience in Lowe’s iOS app. The company is investing in emerging technologies such as LiDAR, AI and mixed reality to make home improvement simple and intuitive. “We call it future space commerce and are excited to bring it to our customers,” said Seemantini Godbole, executive vice president and chief information officer of Lowe.
LOW’s net sales increased 2.7% year-on-year to $ 22.92 billion in the fiscal third quarter ended October 29. Its operating profit was $ 2.79 billion, up 28.2% from the same period last year. Its net profit rose 174% from its value a year ago to $ 1.90 billion. And the company EPS increased 200% year-on-year to $ 2.73.
A consensus estimate of revenue of $ 20.84 billion for its fiscal fourth quarter, ending January 2022, indicates a 2.6% improvement over the same period last year. Analysts expect the company’s EPS to be $ 1.69 in the current quarter, reflecting a 27.1% year-over-year increase. Additionally, LOW has beaten Street’s EPS estimates in each of the past four quarters.
LOW gained 58.1% in price over the past year and 32.7% over the past six months to close yesterday’s trading session at $ 257.79.
LOW’s strong fundamentals are reflected in its POWR ratings. LOW has an overall rating of B, which is equivalent to Buying in our property POWR odds system. POWR scores are calculated by considering 118 separate factors, each factor being weighted to an optimal degree.
LOW has a B rating for feel and quality. Among the 61 B-rated stocks Home improvement and property industry, LOW is ranked No. 9.
Beyond what we have stated above, we also rated LOW for growth, value, momentum and stability. Click here to see all LOW ratings.
Mohawk Industries, Inc. (MHK)
MHK in Calhoun, georgia, designs, manufactures, supplies, distributes and markets flooring products for the renovation and new construction of residential and commercial spaces around the world. It operates through three segments: Global Ceramic; Flooring North America (Flooring NA) and Flooring Rest of the world (Flooring ROW).
The company signed The Climate Pledge, a sustainability-driven effort, and agreed to incorporate climate-sensitive strategies, neutralize remaining emissions with permanent and socially beneficial offsets, achieve zero net annual carbon emissions. ‘by 2040 and implement decarbonization strategies.
MHK’s net sales rose 9.4% year-on-year to $ 2.82 billion in its fiscal third quarter, ended Oct. 2. Its operating profit rose 37% from its value a year ago to $ 359.97 million. Its adjusted net income stood at $ 272.05 million, indicating an increase of 16.8% over the same period last year. And the company’s adjusted EPS increased 21.2% year-over-year to $ 3.95.
Analysts expect MHK’s revenue to grow 17% year-over-year to $ 11.17 billion in its 2021 fiscal year. The consensus EPS estimate of $ 14.77 for the year shows an increase of 67.3% year over year. The company has an impressive history of profit surprises; it has beaten consensus EPS estimates in each of the past four quarters.
Over the past year, the stock gained 26.2% of its price to close yesterday’s trading session at $ 180.47.
It’s no surprise that MHK has an overall rating of B, which equates to a purchase rating in our proprietary POWR rating system. MHK also has a B rating for value, momentum and quality. It is ranked # 6 in the Home improvement and property industry. Click here to display additional MHK ratings for growth, sentiment and stability.
LOW shares were trading at $ 252.16 per share on Friday morning, down $ 5.63 (-2.18%). Year-to-date, LOW is down -2.45%, compared to a -2.04% increase in the benchmark S&P 500 over the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After obtaining a master’s degree in economics, she acquired knowledge in equity research and portfolio management at Finlatics. Following…
More resources for actions in this article