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Lowe's Companies

NYSE:LOW
Snowflake Description

Outstanding track record average dividend payer.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
LOW
NYSE
$67B
Market Cap
  1. Specialty Retail
Company description

Lowe’s Companies, Inc. operates as a home improvement company in the United States, Canada, and Mexico. More info.


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3 Month History
LOW
Industry
5yr Volatility vs Market

Value

 Is Lowe's Companies undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Lowe's Companies to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Lowe's Companies is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Lowe's Companies's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Lowe's Companies's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Lowe's Companies is overvalued based on earnings compared to the US Specialty Retail industry average.
  • Lowe's Companies is good value based on earnings compared to the US market.
Price based on expected Growth
Does Lowe's Companies's expected growth come at a high price?
  • Lowe's Companies is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Lowe's Companies's assets?
  • Lowe's Companies is overvalued based on assets compared to the US Specialty Retail industry average.
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Value checks
We assess Lowe's Companies's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Specialty Retail industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Specialty Retail industry average (and greater than 0)? (1 check)
  5. Lowe's Companies has a total score of 1/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (19.7%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

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.

5 year cash flow forecast

Present value of next 5 years cash flows:
$16,985

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $5,299 × (1 + 2.47%) ÷ (10.88% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$64,580

Present value of terminal value:
$38,537

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$55,522 = $16,985 + $38,537

Value = Total value / Shares Outstanding ($55,522 / 833)

Discount to Share Price

Value per share:
$66.67

Current discount (share price of $80.59): -20.88%



Estimate of Discount Rate

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 = 10.88% = 2.47% + (1.117 * 7.53%)



Estimate of Bottom Up Beta

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). Note the market value of equity is used not the book value ($67,116,333,505).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

1.117 = 0.957 (1 + (1- 30%) (23.9%))

Levered Beta used in calculation = 1.117



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Lowe's Companies expected to perform in the next 1 to 3 years based on estimates from 27 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
8.4%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Lowe's Companies expected to grow at an attractive rate?
  • Lowe's Companies's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • Lowe's Companies's earnings growth is expected to exceed the US market average.
  • Lowe's Companies's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Lowe's Companies's earnings are expected to grow by 8.4% yearly, however this is not considered high growth (20% yearly).
  • Lowe's Companies's revenue is expected to grow by 3.5% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Lowe's Companies is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Specialty Retail industry average.
  • An improvement in Lowe's Companies's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Lowe's Companies's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Lowe's Companies has a total score of 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Lowe's Companies performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Lowe's Companies's growth in the last year to its industry (Specialty Retail).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Lowe's Companies's year on year earnings growth rate has been positive on average over the past 5 years.
  • Lowe's Companies's 1 year earnings growth exceeds its 5 year annual average (42.9% vs 8.6%)
  • Lowe's Companies's earnings growth has exceeded the US Specialty Retail industry average in the past year (42.9% vs 6.2%).
Earnings and Revenue History
Lowe's Companies's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • Lowe's Companies performed above the US Specialty Retail industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has improved significantly over 3 years.
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Past performance checks
We assess Lowe's Companies's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Specialty Retail industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Lowe's Companies has a total score of 6/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Lowe's Companies's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Lowe's Companies's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Lowe's Companies is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Lowe's Companies's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of Lowe's Companies's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is not covered by total short term assets, assets are 0.9x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Lowe's Companies's level of debt (279.3% of total debt) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (63.7% vs 279.3% today).
  • Total debt is well covered by annual operating cash flow (35.7%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 10.7x coverage).
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Financial health checks
We assess Lowe's Companies's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Lowe's Companies has a total score of 3/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Lowe's Companies's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
2.04%
Current annual income from Lowe's Companies dividends. Estimated to be 2.08% next year.
If you bought $2,000 of Lowe's Companies shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate (2.25%).
  • Paying below markets top dividend payers (3.18%).
Upcoming dividend payment

Purchase Lowe's Companies on or before the 'Buy Limit' to receive their next dividend payment.

Dividends are usually paid every 3 or 6 months, you can time your share purchase to take advantage of upcoming dividend payments.
Dividend payment calendar
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been stable in the past 10 years.
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of Lowe's Companies's earnings are paid to the shareholders as a dividend.
  • Dividends paid are well covered by net profit (2.7x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by net profit (3.3x coverage).
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Income/ dividend checks
We assess Lowe's Companies's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Lowe's Companies afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Lowe's Companies has a total score of 4/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Lowe's Companies's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Robert Niblock, image provided by Google.
Robert Niblock
COMPENSATION $12,670,019
AGE 54
TENURE AS CEO 12.8 years
CEO Bio

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 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 served as Director of Hydrox Holdings Pty Ltd from October 22, 2009 to August 10, 2016. He is a Certified Public Accountant. Mr. Niblock holds a Bachelor's degree in Accounting from the University of North Carolina-Charlotte.

CEO Compensation
  • Robert's compensation has been consistent with company performance over the past year.
  • Robert's compensation appears reasonable.
Management Team Tenure

Average tenure and age of the Lowe's Companies management team in years:

4.6
Average Tenure
52.1
Average Age
  • The tenure for the Lowe's Companies management team is about average.
Management Team

Robert Niblock

TITLE
Chairman
COMPENSATION
$13M
AGE
54
TENURE
12.8 yrs

Ricky Damron

TITLE
Chief Operating Officer
COMPENSATION
$5M
AGE
54
TENURE
5.6 yrs

Bill McCanless

TITLE
Chief Compliance Officer
COMPENSATION
$3M
AGE
59
TENURE
2.8 yrs

Jeff Weber

TITLE
Chief Human Resources Officer
COMPENSATION
$3M
AGE
50
TENURE
1.7 yrs

Marshall Croom

TITLE
Chief Financial Officer
AGE
56
TENURE
0.7 yrs

Matthew Hollifield

TITLE
Chief Accounting Officer and Senior Vice President
AGE
51
TENURE
12 yrs

Tiffany Mason

TITLE
Senior VP of Corporate Finance & Treasurer
TENURE
2.3 yrs

Paul Ramsay

TITLE
Chief Information Officer
AGE
52
TENURE
3.4 yrs

Richard Maltsbarger

TITLE
Chief Development Officer and President of International
AGE
41
TENURE
3.4 yrs

Jocelyn Wong

TITLE
Chief Marketing Officer
TENURE
0.8 yrs
Board of Directors Tenure

Average tenure and age of the Lowe's Companies board of directors in years:

6.2
Average Tenure
62.6
Average Age
  • The tenure for the Lowe's Companies board of directors is about average.
Board of Directors

Robert Niblock

TITLE
Chairman
COMPENSATION
$13M
AGE
54
TENURE
12.8 yrs

Marshall Larsen

TITLE
Lead Independent Director
COMPENSATION
$273K
AGE
69

Raul Alvarez

TITLE
Independent Director
COMPENSATION
$258K
AGE
62
TENURE
7.3 yrs

Eric Wiseman

TITLE
Independent Director
COMPENSATION
$253K
AGE
61
TENURE
6 yrs

Bray Braly

TITLE
Independent Director
COMPENSATION
$244K
AGE
56
TENURE
4 yrs

Bob Johnson

TITLE
Independent Director
COMPENSATION
$233K
AGE
71
TENURE
12.8 yrs

Rick Dreiling

TITLE
Independent Director
COMPENSATION
$233K
AGE
64
TENURE
5.8 yrs

Jim Morgan

TITLE
Independent Director
COMPENSATION
$233K
AGE
70
TENURE
2.8 yrs

Laurie Douglas

TITLE
Independent Director
COMPENSATION
$233K
AGE
53
TENURE
2.5 yrs

Bert Scott

TITLE
Independent Director
COMPENSATION
$233K
AGE
66
TENURE
2 yrs
Recent Insider Trading
  • Lowe's Companies insiders have only sold shares in the past 3 months.
Who owns this company?
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Management checks
We assess Lowe's Companies's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Lowe's Companies has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

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.

Details
Name: Lowe's Companies, Inc.
Ticker: LOW
Exchange: NYSE
Founded: 1946
Market Cap: $67,116,333,505
Shares outstanding: 832,812,179
Website: http://www.lowes.com
Address: Lowe's Companies, Inc.
1000 Lowe’s Boulevard,
Mooresville,
North Carolina, 28117,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NYSE LOW Common Stock New York Stock Exchange US USD 02. Jan 1969
DB LWE Common Stock Deutsche Boerse AG DE EUR 02. Jan 1969
BMV LOW * Common Stock Bolsa Mexicana de Valores MX MXN 02. Jan 1969
Number of employees
Current staff
Staff numbers
290,000
Lowe's Companies employees.
Industry
Industry: Home Improvement Retail
Sector: Retailing