LOWE'S COS INC (LOW) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:LOW - US5486611073 - Common Stock
269.42 USD
-4.52 (-1.65%)
268 USD
-1.42 (-0.53%)
LOW gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 122 industry peers in the Specialty Retail industry. LOW scores excellent on profitability, 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.
- In the past year LOW had a positive cash flow from operations.
- 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 88.52% of the companies in the same industry.
- LOW's Return On Invested Capital of 22.95% is amongst the best of the industry. LOW outperforms 89.34% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital 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
- LOW's Profit Margin of 8.02% is amongst the best of the industry. LOW outperforms 84.43% of its industry peers.
- In the last couple of years the Profit Margin of LOW has grown nicely.
- LOW's Operating Margin of 12.19% is amongst the best of the industry. LOW outperforms 86.89% of its industry peers.
- LOW's Operating Margin has improved in the last couple of years.
- LOW has a Gross Margin (33.59%) which is in line with its industry peers.
- 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.
- 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.
- Compared to 1 year ago, LOW has an improved debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 3.36 indicates that LOW is not in any danger for bankruptcy at the moment.
- The Altman-Z score of LOW (3.36) is better than 77.05% of its industry peers.
- The Debt to FCF ratio of LOW is 5.66, which is a neutral value as it means it would take LOW, 5.66 years of fcf income to pay off 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 | 3.36 |
ROIC/WACC2.48
WACC9.24%
2.3 Liquidity
- A Current Ratio of 1.04 indicates that LOW should not have too much problems paying its short term obligations.
- With a Current ratio value of 1.04, LOW is not doing good in the industry: 72.95% of the companies in the same industry are doing better.
- A Quick Ratio of 0.16 indicates that LOW may have some problems paying 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%.
- The Earnings Per Share has been growing by 15.93% on average over the past years. This is quite good.
- Looking at the last year, LOW shows a small growth in Revenue. The Revenue has grown by 0.64% in the last year.
- Measured over the past years, LOW shows a small growth in Revenue. The Revenue has been growing by 3.01% on average per year.
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
- Based on estimates for the next years, LOW will show a small growth in Earnings Per Share. The EPS will grow by 7.26% on average per year.
- LOW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.00% yearly.
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.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 22.01, which indicates a rather expensive current valuation of LOW.
- Based on the Price/Earnings ratio, LOW is valued a bit cheaper than 72.13% of the companies in the same industry.
- LOW is valuated rather cheaply when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
- With a Price/Forward Earnings ratio of 20.60, LOW is valued on the expensive side.
- 62.30% of the companies in the same industry are more expensive than LOW, based on the Price/Forward Earnings ratio.
- LOW is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.83, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.01 | ||
| Fwd PE | 20.6 |
4.2 Price Multiples
- The rest of the industry has a similar Enterprise Value to EBITDA ratio as LOW.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of LOW indicates a somewhat cheap valuation: LOW is cheaper than 71.31% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.44 | ||
| EV/EBITDA | 15.36 |
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)6.54
PEG (5Y)1.38
EPS Next 2Y4.49%
EPS Next 3Y5.79%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.75%, LOW has a reasonable but not impressive dividend return.
- LOW's Dividend Yield is a higher than the industry average which is at 2.15.
- Compared to an average S&P500 Dividend Yield of 1.82, LOW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.75% |
5.2 History
- On average, the dividend of LOW grows each year by 16.94%, which is quite nice.
- LOW has paid a dividend for at least 10 years, which is a reliable track record.
- LOW has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)16.94%
Div Incr Years34
Div Non Decr Years34
5.3 Sustainability
- LOW pays out 38.65% of its income as dividend. This is a sustainable payout ratio.
- LOW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP38.65%
EPS Next 2Y4.49%
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%.