NYSE:LOW

Stock Analysis Report

Executive Summary

Lowe's Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico.

Rewards

Trading at 26.7% below its fair value

Earnings are forecast to grow 12.28% per year

Pays a high and reliable dividend of 1.87%

Risk Analysis

Has a high level of debt

Large one-off items impacting financial results



Snowflake Analysis

Established dividend payer with mediocre balance sheet.


Similar Companies

Share Price & News

How has Lowe's Companies's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LOW has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.9%

LOW

1.9%

US Specialty Retail

0.8%

US Market


1 Year Return

27.7%

LOW

25.2%

US Specialty Retail

17.8%

US Market

Return vs Industry: LOW exceeded the US Specialty Retail industry which returned 25.2% over the past year.

Return vs Market: LOW exceeded the US Market which returned 17.8% over the past year.


Shareholder returns

LOWIndustryMarket
7 Day1.9%1.9%0.8%
30 Day2.8%3.0%1.8%
90 Day3.3%6.7%4.1%
1 Year30.3%27.7%27.2%25.2%20.4%17.8%
3 Year69.5%60.0%36.7%29.6%45.9%36.4%
5 Year95.1%78.4%48.5%35.8%68.1%49.6%

Price Volatility Vs. Market

How volatile is Lowe's Companies's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Lowe's Companies undervalued compared to its fair value and its price relative to the market?

26.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LOW ($117.66) is trading below our estimate of fair value ($160.46)

Significantly Below Fair Value: LOW is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: LOW is poor value based on its PE Ratio (31.5x) compared to the Specialty Retail industry average (16x).

PE vs Market: LOW is poor value based on its PE Ratio (31.5x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: LOW is poor value based on its PEG Ratio (2.6x)


Price to Book Ratio

PB vs Industry: LOW is overvalued based on its PB Ratio (36.8x) compared to the US Specialty Retail industry average (1.5x).


Next Steps

Future Growth

How is Lowe's Companies forecast to perform in the next 1 to 3 years based on estimates from 30 analysts?

12.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LOW's forecast earnings growth (12.3% per year) is above the savings rate (1.7%).

Earnings vs Market: LOW's earnings (12.3% per year) are forecast to grow slower than the US market (14.2% per year).

High Growth Earnings: LOW's earnings are forecast to grow, but not significantly.

Revenue vs Market: LOW's revenue (3% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: LOW's revenue (3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LOW's Return on Equity is forecast to be very high in 3 years time (416.2%).


Next Steps

Past Performance

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

2.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LOW has a large one-off loss of $1.6B impacting its November 1 2019 financial results.

Growing Profit Margin: LOW's current net profit margins (4.1%) are lower than last year (5.2%).


Past Earnings Growth Analysis

Earnings Trend: LOW's earnings have grown by 2.8% per year over the past 5 years.

Accelerating Growth: LOW's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LOW had negative earnings growth (-20.2%) over the past year, making it difficult to compare to the Specialty Retail industry average (3.8%).


Return on Equity

High ROE: Whilst LOW's Return on Equity (119.89%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Lowe's Companies's financial position?


Financial Position Analysis

Short Term Liabilities: LOW's short term assets ($15.7B) exceed its short term liabilities ($15.1B).

Long Term Liabilities: LOW's short term assets ($15.7B) do not cover its long term liabilities ($22.2B).


Debt to Equity History and Analysis

Debt Level: LOW's debt to equity ratio (704.5%) is considered high.

Reducing Debt: LOW's debt to equity ratio has increased from 106% to 704.5% over the past 5 years.

Debt Coverage: LOW's debt is well covered by operating cash flow (20.2%).

Interest Coverage: LOW's interest payments on its debt are well covered by EBIT (9.6x coverage).


Balance Sheet

Inventory Level: LOW has a high level of physical assets or inventory.

Debt Coverage by Assets: LOW's debt is not covered by short term assets (assets are 0.9x debt).


Next Steps

Dividend

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

1.87%

Current Dividend Yield


Upcoming Dividend Payment

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


Dividend Yield vs Market

company1.9%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years1.9%

Current dividend yield vs market & industry

Notable Dividend: LOW's dividend (1.87%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: LOW's dividend (1.87%) is low compared to the top 25% of dividend payers in the US market (3.72%).


Stability and Growth of Payments

Stable Dividend: LOW's dividends per share have been stable in the past 10 years.

Growing Dividend: LOW's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (55.1%), LOW's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LOW's dividends in 3 years are forecast to be well covered by earnings (35.6% payout ratio).


Next Steps

Management

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

2.9yrs

Average management tenure


CEO

Marvin Ellison (54yo)

1.4yrs

Tenure

US$14,302,791

Compensation

Mr. Marvin R. Ellison has been a Director of FedEx Corporation since 2014. Mr. Ellison serves as the President, Chief Executive Officer and Director of Lowe’s Companies, Inc since July 2, 2018. Mr. Ellison ...


CEO Compensation Analysis

Compensation vs Market: Marvin's total compensation ($USD14.30M) is above average for companies of similar size in the US market ($USD10.94M).

Compensation vs Earnings: Insufficient data to compare Marvin's compensation with company performance.


Management Age and Tenure

2.9yrs

Average Tenure

53.5yo

Average Age

Experienced Management: LOW's management team is considered experienced (2.9 years average tenure).


Board Age and Tenure

4.3yrs

Average Tenure

63.5yo

Average Age

Experienced Board: LOW's board of directors are considered experienced (4.3 years average tenure).


Insider Trading

Insider Buying: LOW insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$152,35219 Sep 19
Matthew Hollifield
EntityIndividual
Shares1,356
Max PriceUS$112.35
SellUS$1,417,77317 Sep 19
Jennifer Weber
EntityIndividual
Role
Head of Human Resources
Executive Vice President of Human Resources
Shares12,589
Max PriceUS$112.62
BuyUS$200,34221 Jun 19
Donald Frieson
EntityIndividual
Shares2,030
Max PriceUS$98.69
BuyUS$950,53829 May 19
Marvin Ellison
EntityIndividual
Role
Chief Executive Officer
President
Shares10,000
Max PriceUS$95.05
BuyUS$23,72528 May 19
Lisa Wardell
EntityIndividual
Shares250
Max PriceUS$94.90

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Bill McCanless (61yo)

    Executive VP

    • Tenure: 4.9yrs
    • Compensation: US$2.83m
  • Marvin Ellison (54yo)

    President

    • Tenure: 1.4yrs
    • Compensation: US$14.30m
  • Jennifer Weber (52yo)

    Executive Vice President of Human Resources

    • Tenure: 3.8yrs
    • Compensation: US$2.84m
  • Nelson Peace (53yo)

    Senior Vice President of Administration

    • Tenure: 7.9yrs
  • Joe McFarland (49yo)

    Executive Vice President of Stores

    • Tenure: 1.3yrs
    • Compensation: US$3.74m
  • Dave Denton (54yo)

    Executive VP

    • Tenure: 0yrs
    • Compensation: US$3.11m
  • Jocelyn Wong

    Senior VP & Chief Marketing Officer

    • Tenure: 2.9yrs
  • Seemantini Godbole

    EVP & Chief Information Officer

    • Tenure: 1.1yrs
  • Jeff Vining

    Senior VP

    • Tenure: 2.9yrs
  • Dan Frahm

    Vice President of Corporate Communications

    • Tenure: 0yrs

Board Members

  • Brian Rogers (64yo)

    Independent Director

    • Tenure: 1.5yrs
    • Compensation: US$249.58k
  • Rick Dreiling (66yo)

    Independent Chairman

    • Tenure: 1.4yrs
    • Compensation: US$456.66k
  • Sandy Cochran (61yo)

    Independent Director

    • Tenure: 3.9yrs
    • Compensation: US$272.08k
  • Jim Morgan (72yo)

    Independent Director

    • Tenure: 4.9yrs
    • Compensation: US$272.08k
  • Eric Wiseman (63yo)

    Independent Director

    • Tenure: 8.1yrs
    • Compensation: US$292.08k
  • Bert Scott (68yo)

    Independent Director

    • Tenure: 4.1yrs
    • Compensation: US$272.08k
  • Raul Alvarez (64yo)

    Independent Director

    • Tenure: 9.3yrs
    • Compensation: US$297.08k
  • Laurie Douglas (55yo)

    Independent Director

    • Tenure: 4.6yrs
    • Compensation: US$272.08k
  • Bray Braly (58yo)

    Independent Director

    • Tenure: 6.1yrs
    • Compensation: US$287.08k
  • Marvin Ellison (54yo)

    President

    • Tenure: 1.4yrs
    • Compensation: US$14.30m

Company Information

Lowe's Companies, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Lowe's Companies, Inc.
  • Ticker: LOW
  • Exchange: NYSE
  • Founded: 1946
  • Industry: Home Improvement Retail
  • Sector: Retail
  • Market Cap: US$89.279b
  • Shares outstanding: 766.48m
  • Website: https://www.lowes.com

Number of Employees


Location

  • Lowe's Companies, Inc.
  • 1000 Lowe’s Boulevard
  • Mooresville
  • North Carolina
  • 28117
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LOWNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1969
0JVQLSE (London Stock Exchange)YesCommon StockGBUSDJan 1969
LWEDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1969
LOW *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1969
LWEETLX (Eurotlx)YesCommon StockITEURJan 1969
LOWEWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1969
LOWC34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 1 REP 0.5 COM USD0.50BRBRLMay 2019

Biography

Lowe's Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States, Canada, and Mexico. The company offers a line of products for construction, maintenance ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/11 23:37
End of Day Share Price2019/12/11 00:00
Earnings2019/11/01
Annual Earnings2019/02/01


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.