5 Famous Value Stocks that Underperformed in 2022

In this article, we discuss the 5 famous value stocks that underperformed in 2022. If you want to read about some more value stocks, go directly to 10 Famous Value Stocks that Underperformed in 2022.

5. Lowe’s Companies, Inc. (NYSE:LOW)

Number of Hedge Fund Holders: 65    

PE Ratio: 16.83

Percentage Decline in Share Price YTD as of August 12: 19.19%

Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement retailer. In late July, the firm announced that it planned to use the metaverse technology to allow users to see the upgrades they had opted for in virtual reality before implementing it at their homes. As part of this plan, the firm will make more than 500 3D product assets available for download for free via the Open Builder platform. The home improvement retailer is expected to issue an earnings report in mid-August as retailers struggle with bloated inventories. 

On August 11, Citi analyst Steven Zaccone downgraded Lowe’s Companies, Inc. (NYSE:LOW) stock to Neutral from Buy and lowered the price target to $205 from $222, noting the weakening macro backdrop as one of the main reasons behind the downgrade. 

At the end of the first quarter of 2022, 65 hedge funds in the database of Insider Monkey held stakes worth $5.5 billion in Lowe’s Companies, Inc. (NYSE:LOW), compared to 72 in the preceding quarter worth $6.8 billion.

In its Q4 2021 investor letter, Pershing Square Capital Management, an asset management firm, highlighted a few stocks and Lowe’s Companies, Inc. (NYSE:LOW) was one of them. Here is what the fund said:

“Lowe’s Companies, Inc. (NYSE:LOW) is a high-quality business with significant long-term earnings growth potential

Supportive macroeconomic backdrop

-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog

-COVID-19 causing millennials to enter the housing market

Positioned to grow EPS largely independent of market conditions

-Idiosyncratic revenue opportunities driving share gains

-Self-help initiatives catalyzing operating margin expansion

-Buybacks representing ~8% of current market capitalization planned for 2022

Multi-year business transformation with substantial earnings upside

-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing

-Potential to generate high-teens EPS growth over the next several years.

Lowe’s Companies, Inc. (NYSE:LOW) continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”