LOW - Lowe's Stock: Buy Wonderful Businesses At Fair Prices
2024-05-03 03:39:23 ET
Summary
- Lowe's valuation, with P/E ratios substantially higher than the sector median, is by no means cheap.
- However, I do not see an obvious overvaluation either in terms of P/E or dividend yield in comparison to its historical track record.
- And during uncertainties time like ours, it is especially important to invest in wonderful business at fair prices rather than fair businesses at wonderful prices.
Lowe's stock trades at fair valuation
The current situation surrounding Lowe's ( LOW ) stock reminds me of the wisdom of Warren Buffett: you'd rather buy a wonderful business at a fair price than a fair business at a wonderful price. Indeed, LOW's valuation is by no means cheap as seen in the chart below. This chart displays LOW stock's valuation grade in comparison to the sector median and its own 5-year average levels. As seen, LOW stock has an overall valuation grade of quite an off-putting D-. Overall, LOW's P/E ratios are higher than the sector median by a large margin and quite close to its 5-year average levels. For example, its P/E ratio (TTM) stands at 17.46x, not cheap at all in any absolute or relative terms. It is higher than the sector median of 13.82x by 26.28% and essentially on par with its 5-year average of 18.55x....
Lowe's Stock: Buy Wonderful Businesses At Fair Prices