05-28-2021, 09:33 AM
(This post was last modified: 05-28-2021, 09:35 AM by crimsonghost747.)
(05-28-2021, 08:14 AM)EricL Wrote:(05-28-2021, 06:16 AM)fenders53 Wrote: Looks to be well covered. Their payout ratio was conservative. I wouldn't expect future increases like this. LOW competes with HD in every way and they were getting way behind on dividends.
LOW has guided for a 35% payout ratio, and this raise puts the payout ratio at 36% of current estimates of $8.86 in earnings in 2021.
Earnings are forecast to rise another 24% in 2022, so this may not be the last of big increases.
First of all, thanks for those data points. It's really good info. And I have no questions about the payout ratio at the current earnings.
I am just quite skeptical of the earnings growth going forward. I think the stock is great, it's one of my largest holdings, I also really think the company has really improved during the years that I've been a shareholder.
But I see very little growth drivers from here.
-The housing market is already extremely overheated, that can't go on forever.
-covid restrictions will probably start to fade away globally sooner rather than later, which will most certainly take people out of the house more (= less need to spend money on renovations) and when travel, restaurants and social life in general open up to their normal levels, these will also drain the wallet of people who haven't had the chance to spend on experiences in over a year.
-those stimulus checks can't keep coming forever.
-I also have no idea what the current situation is for the average joe. But I would venture a guess that if you spent the better part of the last 12 months renovating your house, it should be more or less in shape soon.
Covid, stimulus checks and the super hot housing market are, in my view, the main reasons for the increased sales/earnings in 2020 and beginning of 2021. Once we take those away, I just don't see how 20% earnings growth will continue. I hope it does, in that case I'll be rich in no time with the amount of LOW that I own. I just think it's much more realistic to expect flat earnings for a couple of years (starting from 2022) since people will be spending on experiences rather than their home. As fenders put it, 5% used to be normal.