The calculations below outline how an intrinsic value for Lowe's Companies is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$4,023.17||$4,500.11||$4,780.33||$5,040.50||$5,466.50|
|Source||Analyst x12||Analyst x9||Analyst x9||Analyst x4||Analyst x2|
Discounted (@ 9.4%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $5,467 × (1 + 2.3%) ÷ (9.36% – 2.3%)
Terminal value based on the Perpetuity Method where growth (g) = 2.3%:
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
Value = Total value / Shares Outstanding ($69,006 / 829)
Value per share:
Current discount (share price of $75.69): 9%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 9.36% = 2.33% + (0.916 * 7.67%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.916 = 0.777 (1 + (1- 30%) (25.61%))
Levered Beta used in calculation = 0.916
Are Lowe's Companies's annual earnings growth expected to exceed 3.4% over the next 3 years?
Mr. Robert Alan Niblock has been the Chief Executive Officer of Lowe's Companies, Inc. since January 28, 2005. Mr. Niblock has been the President of Lowe's Companies Inc. since May 2011. He joined Lowe's Companies, Inc. in 1993 and served as its Executive Vice President from 2001 to 2003, Chief Financial Officer from 2000 to 2003, Senior Vice President of Finance from 1999 to 2000 and Vice President & Treasurer from 1997 to 1998. He held a nine-year career with accounting firm Ernst & Young. He served as the Chairman of the Board at Retail Industry Leaders Association from 2008 to 2009 and Vice Chairman from 2006 to 2007. He serves as the Chairman of Lowe's Companies, Inc. He has been a Director of ConocoPhillips Co., Inc. and ConocoPhillips (U.K.) Limited since February 12, 2010. He serves as Director of Hydrox Holdings Pty Ltd. He has been a Director at Lowe's Companies, Inc. since April 5, 2004. He has been a Director/Member of Retail Industry Leaders Association since 2003. He is a Certified Public Accountant. Mr. Niblock holds a Bachelor's degree in Accounting from the University of North Carolina-Charlotte.
Average tenure of the Lowe's Companies management team:
Average tenure of the Lowe's Companies board of directors:
Lowe’s Companies, Inc. operates as a home improvement company in the United States, Canada, and Mexico. It offers a line of products for maintenance, repair, remodeling, and decorating. The company provides home improvement products in various categories, such as lumber and building materials, tools and hardware, appliances, fashion fixtures, rough plumbing and electrical, seasonal living, lawn and garden, paint, millwork, flooring, kitchens, outdoor power equipment, and home fashions. It also offers installation services through independent contractors in various product categories; extended protection plans; and in-warranty and out-of-warranty repair services. The company sells its national brand-name merchandise and private branded products to homeowners, renters, and professional customers; and retail customers comprising individual homeowners and renters. As of March 24, 2017, it operated 2,365 home improvement and hardware stores. The company also sells its products through online sites comprising Lowes.com and Lowesforpros.com; and through mobile applications. Lowe’s Companies, Inc. was founded in 1946 and is headquartered in Mooresville, North Carolina.
|Name:||Lowe's Companies, Inc.|
|Market Cap:||$62,734 million|
1000 Lowe’s Boulevard, Mooresville, 28117, United States
|Industry:||Home Improvement Retail|