LOWE'S COS INC (LOW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:LOW - US5486611073 - Common Stock
274.95 USD
-2.16 (-0.78%)
274.617 USD
-0.33 (-0.12%)
LOW gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 121 industry peers in the Specialty Retail industry. While LOW belongs to the best of the industry regarding profitability, 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
- LOW had positive earnings in the past year.
- LOW had a positive operating cash flow in the past year.
- LOW had positive earnings in each of the past 5 years.
- In the past 5 years LOW always reported a positive cash flow from operatings.
1.2 Ratios
- Looking at the Return On Assets, with a value of 12.65%, LOW belongs to the top of the industry, outperforming 88.43% of the companies in the same industry.
- LOW has a better Return On Invested Capital (22.95%) than 89.26% of its industry peers.
- LOW had an Average Return On Invested Capital over the past 3 years of 32.20%. This is significantly above the industry average of 12.37%.
- 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
- LOW has a better Profit Margin (8.02%) than 84.30% of its industry peers.
- In the last couple of years the Profit Margin of LOW has grown nicely.
- With an excellent Operating Margin value of 12.19%, LOW belongs to the best of the industry, outperforming 86.78% of the companies in the same industry.
- In the last couple of years the Operating Margin of LOW has grown nicely.
- Looking at the Gross Margin, with a value of 33.59%, LOW is in line with its industry, outperforming 41.32% of the companies in the same industry.
- LOW's Gross Margin has been stable in the last couple of years.
| 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
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), LOW is creating value.
- LOW has less shares outstanding than it did 1 year ago.
- The number of shares outstanding for LOW has been reduced compared to 5 years ago.
- LOW has a better debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 3.39 indicates that LOW is not in any danger for bankruptcy at the moment.
- LOW has a better Altman-Z score (3.39) than 77.69% of its industry peers.
- 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.
- LOW's Debt to FCF ratio of 5.66 is fine compared to the rest of the industry. LOW outperforms 65.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 5.66 | ||
| Altman-Z | 3.39 |
ROIC/WACC2.47
WACC9.31%
2.3 Liquidity
- A Current Ratio of 1.04 indicates that LOW should not have too much problems paying its short term obligations.
- LOW has a Current ratio of 1.04. This is in the lower half of the industry: LOW underperforms 72.73% of its industry peers.
- A Quick Ratio of 0.16 indicates that LOW may have some problems paying its short term obligations.
- The Quick ratio of LOW (0.16) is worse than 91.74% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 0.16 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 3.55% over the past year.
- Measured over the past years, LOW shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.93% on average per year.
- The Revenue has been growing slightly by 0.64% in the past year.
- LOW shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.01% yearly.
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.
- Based on estimates for the next years, LOW will show a small growth in Revenue. The Revenue will grow by 4.00% on average per year.
EPS Next Y3.37%
EPS Next 2Y4.48%
EPS Next 3Y5.78%
EPS Next 5Y7.26%
Revenue Next Year3.17%
Revenue Next 2Y5.66%
Revenue Next 3Y4.95%
Revenue Next 5Y4%
3.3 Evolution
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- 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
- Based on the Price/Earnings ratio of 22.46, the valuation of LOW can be described as rather expensive.
- Based on the Price/Earnings ratio, LOW is valued a bit cheaper than 73.55% of the companies in the same industry.
- LOW is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.32, which is the current average of the S&P500 Index.
- The Price/Forward Earnings ratio is 21.02, which indicates a rather expensive current valuation of LOW.
- Based on the Price/Forward Earnings ratio, LOW is valued a bit cheaper than the industry average as 63.64% of the companies are valued more expensively.
- The average S&P500 Price/Forward Earnings ratio is at 24.32. LOW is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.46 | ||
| Fwd PE | 21.02 |
4.2 Price Multiples
- LOW's Enterprise Value to EBITDA is on the same level as the industry average.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of LOW indicates a somewhat cheap valuation: LOW is cheaper than 71.90% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.88 | ||
| EV/EBITDA | 15.62 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- LOW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)6.66
PEG (5Y)1.41
EPS Next 2Y4.48%
EPS Next 3Y5.78%
5. Dividend
5.1 Amount
- LOW has a Yearly Dividend Yield of 1.73%. Purely for dividend investing, there may be better candidates out there.
- LOW's Dividend Yield is a higher than the industry average which is at 2.08.
- Compared to an average S&P500 Dividend Yield of 1.83, LOW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.73% |
5.2 History
- The dividend of LOW is nicely growing with an annual growth rate of 16.94%!
- LOW has paid a dividend for at least 10 years, which is 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.
- LOW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP38.65%
EPS Next 2Y4.48%
EPS Next 3Y5.78%
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%.