LOWE'S COS INC (LOW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:LOW - US5486611073 - Common Stock
277.18 USD
+0.45 (+0.16%)
Overall LOW gets a fundamental rating of 6 out of 10. We evaluated LOW against 122 industry peers in the Specialty Retail industry. LOW has an excellent profitability rating, but there are some minor concerns on its financial health. LOW is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
- In the past year LOW was profitable.
- LOW had a positive operating cash flow in the past year.
- Each year in the past 5 years LOW has been profitable.
- LOW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- The Return On Assets of LOW (12.65%) is better than 88.52% of its industry peers.
- With an excellent Return On Invested Capital value of 22.95%, LOW belongs to the best of the industry, outperforming 89.34% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for LOW is significantly above the industry average of 12.24%.
- The 3 year average ROIC (32.20%) for LOW is well above the current ROIC(22.95%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.65% | ||
| ROE | N/A | ||
| ROIC | 22.95% |
ROA(3y)16.41%
ROA(5y)16.1%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)32.2%
ROIC(5y)32.68%
1.3 Margins
- Looking at the Profit Margin, with a value of 8.02%, LOW belongs to the top of the industry, outperforming 84.43% of the companies in the same industry.
- In the last couple of years the Profit Margin of LOW has grown nicely.
- LOW has a Operating Margin of 12.19%. This is amongst the best in the industry. LOW outperforms 86.89% of its industry peers.
- In the last couple of years the Operating Margin of LOW has grown nicely.
- LOW has a Gross Margin (33.59%) which is comparable to the rest of the industry.
- In the last couple of years the Gross Margin of LOW has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.19% | ||
| PM (TTM) | 8.02% | ||
| GM | 33.59% |
OM growth 3Y-1.15%
OM growth 5Y6.8%
PM growth 3Y-1.72%
PM growth 5Y6.99%
GM growth 3Y0.01%
GM growth 5Y0.94%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so LOW is creating value.
- The number of shares outstanding for LOW has been reduced compared to 1 year ago.
- LOW has less shares outstanding than it did 5 years ago.
- LOW has a better debt/assets ratio than last year.
2.2 Solvency
- LOW has an Altman-Z score of 3.39. This indicates that LOW is financially healthy and has little risk of bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 3.39, LOW is in the better half of the industry, outperforming 77.87% of the companies in the same industry.
- LOW has a debt to FCF ratio of 5.66. This is a neutral value as LOW would need 5.66 years to pay back of all of its debts.
- With a decent Debt to FCF ratio value of 5.66, LOW is doing good in the industry, outperforming 64.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.66 | ||
| Altman-Z | 3.39 |
ROIC/WACC2.48
WACC9.25%
2.3 Liquidity
- LOW has a Current Ratio of 1.04. This is a normal value and indicates that LOW is financially healthy and should not expect problems in meeting its short term obligations.
- The Current ratio of LOW (1.04) is worse than 72.95% of its industry peers.
- LOW has a Quick Ratio of 1.04. This is a bad value and indicates that LOW is not financially healthy enough and could expect problems in meeting its short term obligations.
- LOW's Quick ratio of 0.16 is on the low side compared to the rest of the industry. LOW is outperformed by 91.80% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 0.16 |
3. Growth
3.1 Past
- LOW shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.55%.
- LOW shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.93% yearly.
- LOW shows a small growth in Revenue. In the last year, the Revenue has grown by 0.64%.
- The Revenue has been growing slightly by 3.01% on average over the past years.
EPS 1Y (TTM)3.55%
EPS 3Y0.03%
EPS 5Y15.93%
EPS Q2Q%5.88%
Revenue 1Y (TTM)0.64%
Revenue growth 3Y-4.56%
Revenue growth 5Y3.01%
Sales Q2Q%3.19%
3.2 Future
- LOW is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.26% yearly.
- The Revenue is expected to grow by 4.00% on average over the next years.
EPS Next Y3.37%
EPS Next 2Y4.49%
EPS Next 3Y5.79%
EPS Next 5Y7.26%
Revenue Next Year3.17%
Revenue Next 2Y5.65%
Revenue Next 3Y4.94%
Revenue Next 5Y4%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 22.65, LOW is valued on the expensive side.
- Compared to the rest of the industry, the Price/Earnings ratio of LOW indicates a somewhat cheap valuation: LOW is cheaper than 70.49% of the companies listed in the same industry.
- LOW's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.21.
- Based on the Price/Forward Earnings ratio of 21.19, the valuation of LOW can be described as rather expensive.
- LOW's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. LOW is cheaper than 62.30% of the companies in the same industry.
- LOW is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.65 | ||
| Fwd PE | 21.19 |
4.2 Price Multiples
- LOW's Enterprise Value to EBITDA ratio is in line with the industry average.
- LOW's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. LOW is cheaper than 71.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.05 | ||
| EV/EBITDA | 15.7 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The excellent profitability rating of LOW may justify a higher PE ratio.
PEG (NY)6.72
PEG (5Y)1.42
EPS Next 2Y4.49%
EPS Next 3Y5.79%
5. Dividend
5.1 Amount
- LOW has a Yearly Dividend Yield of 1.75%.
- LOW's Dividend Yield is a higher than the industry average which is at 2.15.
- LOW's Dividend Yield is comparable with the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.75% |
5.2 History
- The dividend of LOW is nicely growing with an annual growth rate of 16.94%!
- LOW has been paying a dividend for at least 10 years, so it has a reliable track record.
- LOW has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)16.94%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
- 38.65% of the earnings are spent on dividend by LOW. This is a low number and sustainable payout ratio.
- The dividend of LOW is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP38.65%
EPS Next 2Y4.49%
EPS Next 3Y5.79%
LOWE'S COS INC / LOW FAQ
What is the fundamental rating for LOW stock?
ChartMill assigns a fundamental rating of 6 / 10 to LOW.
What is the valuation status of LOWE'S COS INC (LOW) stock?
ChartMill assigns a valuation rating of 4 / 10 to LOWE'S COS INC (LOW). This can be considered as Fairly Valued.
Can you provide the profitability details for LOWE'S COS INC?
LOWE'S COS INC (LOW) has a profitability rating of 8 / 10.
Can you provide the expected EPS growth for LOW stock?
The Earnings per Share (EPS) of LOWE'S COS INC (LOW) is expected to grow by 3.37% in the next year.
How sustainable is the dividend of LOWE'S COS INC (LOW) stock?
The dividend rating of LOWE'S COS INC (LOW) is 6 / 10 and the dividend payout ratio is 38.65%.