In this article, we discuss the 5 important value stocks that are losing value in 2022. If you want to read about some more stocks that are losing value in 2022, go directly to These 15 Important Stocks are Losing Value in 2022.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 65
PE Ratio: 15.06
YTD Decline in Share Price as of June 15: 14.52%
Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement retailer. As interest rates rise, home prices have gone up as well, slowing down the pace of home improvement and resulting in a cooling of the real estate market. Although the company beat market estimates on earnings per share in the recent quarterly results, it missed sales estimates, resulting in a revenue miss as well. The firm blamed cold weather for the sales miss, saying it impacted outdoor sales.
On May 19, Jefferies analyst Jonathan Matuszewski maintained a Buy rating on Lowe’s Companies, Inc. (NYSE:LOW) stock and lowered the price target to $238 from $290, noting that the sales and margin guidance was achievable.
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.”