What happened

Shares of Lowe's (NYSE:LOW) were down 19.3% in March, according to data provided by S&P Global Market Intelligence. The COVID-19 pandemic sparked a broad market sell-off that acutely affected retail stocks. On one hand, it makes sense for retail stocks to be down, since many chains have been forced to close locations and furlough workers.

But on the other hand, Lowe's is still open for business and hasn't announced any emergency financial measures. This suggests its double-digit drop is overdone. 

A representation of DIY home improvement with an assortment of tools.

Image source: Getty Images.

So what

For much of March, coronavirus news seemed to be stuck on repeat. Big consumer-discretionary retailers would temporarily close locations, only to later close stores indefinitely. Workers were furloughed, and financial guidance for 2020 was withdrawn. Share buybacks and dividends stopped. The news was often the same; only the name of the company changed.

However, that's not what happened with Lowe's. Lowe's has remained open, gone on a hiring spree, and has seen surging demand as quarantined homeowners finally get around to tackling their to-do lists. Lowe's hasn't quantified its business performance as of yet. But on March 20, it declared a $0.55 quarterly dividend, in line with past payouts, signaling that the business is still strong enough to support it.

Lowe's did offer $4 billion in notes in March, but this offering was to pay off debt that's coming due and also for general corporate purposes. Other retailers announced funding in March, but in many cases it was to boost liquidity because of uncertainty related to COVID-19. Lowe's offering lacked this wording, suggesting its $4 billion offering is just part of the normal course of business.

Now what

All told, it seems that Lowe's business is still strong. That indicates to me the stock's unjust sell-off presents a buying opportunity for investors.

That said, there are broader macroeconomic trends to be watching. First, if the U.S. economy enters a prolonged recession, that would be challenging for all businesses including Lowe's. Second, there's some early data that suggests the U.S. housing market could suffer in the coming months, which would also be difficult for home improvement retailers like Lowe's.