Will Lowe's Stock Keep Falling? Unusually Heavy LOW Put Options Activity May Imply This - Or Does It?

Lowe's Companies (LOW) stock may be set for a drop over the next quarter, based on unusually heavy LOW put options activity. However, analysts still have higher price targets. Moreover, LOW stock is trading below its historical forward price/earnings (P/E) metric.

LOW is at $193.84 in midday trading on Tuesday, Sept. 22. That's near its lowest point in the last 6 months ($190.98, Sept. 21). Today's heavy put options activity might imply its set for another dip. Or is it?

LOW stock - last 6 months - Barchart - Sept. 22, 2026

Today's Barchart Unusual Stock Options Activity report shows this activity. Over 6,000 put option contracts have traded at the $170.00 strike price for expiry on Dec. 18, 2026, 87 days from now. 

That's 12.4% below today's price, and it may imply investors are nervous about the direction of LOW stock.

LOW puts expiring Dec. 18, 2026 - Barchart Unusual Stock Options Activity Report - Sept. 22, 2026

However, the premium paid by buyers is $3.00, which means that the stock would have to drop to $167 before there is any intrinsic value. That's 14% lower. Is LOW stock really going to tank this much?

Don't forget short-sellers of these puts get to collect this premium. That works out to a 3-month yield of 1.7647% (i.e., $3.00/$170.00). This is very attractive, since even if LOW drops this far and the account is assigned to buy shares at $170, the breakeven point is $167.00.

Moreover, if an investor can repeat this play every 3 months, the expected annualized return is over 5.29%.

LOW Stock is Too Low

One reason investors might be willing to short these puts is that LOW stock is at a historically low valuation point. For example, analysts project $12.32 earnings per share (EPS) this year (ending Jan. 2027), and $13.03 EPS for Jan. 2028.

That puts it at a forward price/earnings (P/E) ratio of 15.7x and 14.9x, respectively. These ratios are much lower than its historical average. For example, Seeking Alpha reports that the average has been 18.23x over the last 5 years. And Morningstar says that it's been 17.2x. In fact, in 2024 the forward P/E averaged 19.97x, and in 2025, 18.27x.

This implies that over the long-run, assuming the stock returns to its average, it could rise to a point where it has a 17.7x average. Here is what that implies:

  2026: $12.32 EPS x 17.7 = $218.06 price target (PT)

  2027: $13.03 EPS x 17.7 = $230.63 PT

 Avg next 12 months PT = $224.35 PT

That is 15.7% over today's price. Moreover, Wall Street analysts agree. Yahoo! Finance reports the average PT from 35 analysts is $252.30, and Barchart's mean analyst survey PT is $251.47. These PTs are 30% higher.

Summary and Conclusion

So, even though higher interest rates may dampen demand for housing materials over the coming year, analysts are still positive on the stock. Moreover, if it reverts to the mean, LOW stock has between 15% and 30% upside. In short, LOW stock is too low.

That could be why investors are willing to short-sell these put options. That way, they are paid to wait in case LOW stock keeps falling. 

And even if it does drop to $170.00, these investors have a lower breakeven point. Given its higher price targets, this implies an attractive long-term buy-and-hold return for investors.