Intrinsic value of Lowe's - LOW

Previous Close

$86.69

  Intrinsic Value

$69.67

stock screener

  Rating & Target

hold

-20%

Previous close

$86.69

 
Intrinsic value

$69.67

 
Up/down potential

-20%

 
Rating

hold

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LOW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 72.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.06
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
Revenue, $m
  65,017
  71,584
  78,449
  85,612
  93,075
  100,843
  108,923
  117,321
  126,049
  135,118
  144,544
  154,342
  164,529
  175,125
  186,152
  197,631
  209,588
  222,048
  235,039
  248,590
  262,732
  277,498
  292,921
  309,038
  325,887
  343,507
  361,940
  381,230
  401,422
  422,565
  444,708
Variable operating expenses, $m
 
  61,050
  66,894
  72,993
  79,347
  85,960
  92,838
  99,988
  107,418
  115,139
  123,164
  131,397
  140,069
  149,090
  158,478
  168,250
  178,430
  189,037
  200,097
  211,634
  223,673
  236,244
  249,374
  263,095
  277,439
  292,440
  308,133
  324,555
  341,745
  359,744
  378,596
Fixed operating expenses, $m
 
  3,916
  4,013
  4,114
  4,217
  4,322
  4,430
  4,541
  4,654
  4,771
  4,890
  5,012
  5,137
  5,266
  5,398
  5,532
  5,671
  5,813
  5,958
  6,107
  6,260
  6,416
  6,576
  6,741
  6,909
  7,082
  7,259
  7,441
  7,627
  7,817
  8,013
Total operating expenses, $m
  59,171
  64,966
  70,907
  77,107
  83,564
  90,282
  97,268
  104,529
  112,072
  119,910
  128,054
  136,409
  145,206
  154,356
  163,876
  173,782
  184,101
  194,850
  206,055
  217,741
  229,933
  242,660
  255,950
  269,836
  284,348
  299,522
  315,392
  331,996
  349,372
  367,561
  386,609
Operating income, $m
  5,846
  6,618
  7,541
  8,505
  9,512
  10,562
  11,655
  12,792
  13,976
  15,208
  16,490
  17,933
  19,322
  20,769
  22,277
  23,848
  25,487
  27,198
  28,984
  30,850
  32,799
  34,838
  36,970
  39,202
  41,538
  43,985
  46,548
  49,235
  52,050
  55,003
  58,099
EBITDA, $m
  7,436
  8,427
  9,512
  10,647
  11,831
  13,065
  14,350
  15,687
  17,078
  18,526
  20,032
  21,599
  23,230
  24,928
  26,698
  28,542
  30,465
  32,472
  34,566
  36,754
  39,039
  41,429
  43,927
  46,542
  49,278
  52,143
  55,145
  58,289
  61,584
  65,039
  68,661
Interest expense (income), $m
  619
  665
  787
  915
  1,047
  1,186
  1,330
  1,480
  1,635
  1,797
  1,965
  2,140
  2,322
  2,511
  2,707
  2,912
  3,125
  3,346
  3,577
  3,818
  4,070
  4,332
  4,606
  4,892
  5,190
  5,503
  5,830
  6,171
  6,529
  6,904
  7,296
Earnings before tax, $m
  5,201
  5,953
  6,754
  7,591
  8,465
  9,376
  10,325
  11,313
  12,341
  13,411
  14,525
  15,793
  17,000
  18,258
  19,569
  20,936
  22,363
  23,852
  25,407
  27,031
  28,730
  30,506
  32,365
  34,311
  36,348
  38,482
  40,719
  43,063
  45,521
  48,099
  50,804
Tax expense, $m
  2,108
  1,607
  1,823
  2,050
  2,285
  2,531
  2,788
  3,054
  3,332
  3,621
  3,922
  4,264
  4,590
  4,930
  5,284
  5,653
  6,038
  6,440
  6,860
  7,298
  7,757
  8,237
  8,739
  9,264
  9,814
  10,390
  10,994
  11,627
  12,291
  12,987
  13,717
Net income, $m
  3,093
  4,346
  4,930
  5,541
  6,179
  6,844
  7,537
  8,258
  9,009
  9,790
  10,603
  11,529
  12,410
  13,328
  14,286
  15,284
  16,325
  17,412
  18,547
  19,733
  20,973
  22,270
  23,626
  25,047
  26,534
  28,092
  29,725
  31,436
  33,231
  35,113
  37,087

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  577
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  34,408
  37,244
  40,816
  44,543
  48,426
  52,468
  56,671
  61,041
  65,582
  70,301
  75,205
  80,303
  85,603
  91,116
  96,853
  102,826
  109,047
  115,530
  122,289
  129,339
  136,697
  144,380
  152,404
  160,790
  169,556
  178,724
  188,314
  198,351
  208,856
  219,857
  231,378
Adjusted assets (=assets-cash), $m
  33,831
  37,244
  40,816
  44,543
  48,426
  52,468
  56,671
  61,041
  65,582
  70,301
  75,205
  80,303
  85,603
  91,116
  96,853
  102,826
  109,047
  115,530
  122,289
  129,339
  136,697
  144,380
  152,404
  160,790
  169,556
  178,724
  188,314
  198,351
  208,856
  219,857
  231,378
Revenue / Adjusted assets
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
  1.922
Average production assets, $m
  19,763
  21,761
  23,848
  26,026
  28,295
  30,656
  33,112
  35,666
  38,319
  41,076
  43,941
  46,920
  50,017
  53,238
  56,590
  60,080
  63,715
  67,503
  71,452
  75,571
  79,871
  84,359
  89,048
  93,948
  99,070
  104,426
  110,030
  115,894
  122,032
  128,460
  135,191
Working capital, $m
  26
  859
  941
  1,027
  1,117
  1,210
  1,307
  1,408
  1,513
  1,621
  1,735
  1,852
  1,974
  2,102
  2,234
  2,372
  2,515
  2,665
  2,820
  2,983
  3,153
  3,330
  3,515
  3,708
  3,911
  4,122
  4,343
  4,575
  4,817
  5,071
  5,336
Total debt, $m
  15,699
  17,893
  20,786
  23,805
  26,950
  30,224
  33,629
  37,168
  40,846
  44,669
  48,641
  52,770
  57,063
  61,529
  66,176
  71,014
  76,053
  81,304
  86,779
  92,490
  98,450
  104,673
  111,173
  117,965
  125,066
  132,491
  140,260
  148,389
  156,899
  165,809
  175,141
Total liabilities, $m
  27,974
  30,168
  33,061
  36,080
  39,225
  42,499
  45,904
  49,443
  53,121
  56,944
  60,916
  65,045
  69,338
  73,804
  78,451
  83,289
  88,328
  93,579
  99,054
  104,765
  110,725
  116,948
  123,448
  130,240
  137,341
  144,766
  152,535
  160,664
  169,174
  178,084
  187,416
Total equity, $m
  6,434
  7,076
  7,755
  8,463
  9,201
  9,969
  10,768
  11,598
  12,461
  13,357
  14,289
  15,257
  16,265
  17,312
  18,402
  19,537
  20,719
  21,951
  23,235
  24,574
  25,972
  27,432
  28,957
  30,550
  32,216
  33,958
  35,780
  37,687
  39,683
  41,773
  43,962
Total liabilities and equity, $m
  34,408
  37,244
  40,816
  44,543
  48,426
  52,468
  56,672
  61,041
  65,582
  70,301
  75,205
  80,302
  85,603
  91,116
  96,853
  102,826
  109,047
  115,530
  122,289
  129,339
  136,697
  144,380
  152,405
  160,790
  169,557
  178,724
  188,315
  198,351
  208,857
  219,857
  231,378
Debt-to-equity ratio
  2.440
  2.530
  2.680
  2.810
  2.930
  3.030
  3.120
  3.200
  3.280
  3.340
  3.400
  3.460
  3.510
  3.550
  3.600
  3.630
  3.670
  3.700
  3.730
  3.760
  3.790
  3.820
  3.840
  3.860
  3.880
  3.900
  3.920
  3.940
  3.950
  3.970
  3.980
Adjusted equity ratio
  0.188
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190
  0.190

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,093
  4,346
  4,930
  5,541
  6,179
  6,844
  7,537
  8,258
  9,009
  9,790
  10,603
  11,529
  12,410
  13,328
  14,286
  15,284
  16,325
  17,412
  18,547
  19,733
  20,973
  22,270
  23,626
  25,047
  26,534
  28,092
  29,725
  31,436
  33,231
  35,113
  37,087
Depreciation, amort., depletion, $m
  1,590
  1,808
  1,971
  2,141
  2,319
  2,503
  2,695
  2,895
  3,102
  3,317
  3,541
  3,666
  3,908
  4,159
  4,421
  4,694
  4,978
  5,274
  5,582
  5,904
  6,240
  6,591
  6,957
  7,340
  7,740
  8,158
  8,596
  9,054
  9,534
  10,036
  10,562
Funds from operations, $m
  5,988
  6,154
  6,901
  7,683
  8,498
  9,348
  10,232
  11,153
  12,111
  13,107
  14,144
  15,194
  16,318
  17,488
  18,707
  19,977
  21,303
  22,685
  24,129
  25,637
  27,213
  28,860
  30,583
  32,386
  34,274
  36,250
  38,321
  40,490
  42,764
  45,148
  47,649
Change in working capital, $m
  371
  79
  82
  86
  90
  93
  97
  101
  105
  109
  113
  118
  122
  127
  132
  138
  143
  150
  156
  163
  170
  177
  185
  193
  202
  211
  221
  231
  242
  254
  266
Cash from operations, $m
  5,617
  6,075
  6,819
  7,597
  8,408
  9,254
  10,135
  11,052
  12,006
  12,999
  14,031
  15,077
  16,195
  17,361
  18,574
  19,840
  21,159
  22,536
  23,973
  25,474
  27,043
  28,683
  30,398
  32,193
  34,072
  36,039
  38,100
  40,259
  42,522
  44,895
  47,383
Maintenance CAPEX, $m
  0
  -1,544
  -1,700
  -1,863
  -2,033
  -2,211
  -2,395
  -2,587
  -2,786
  -2,994
  -3,209
  -3,433
  -3,666
  -3,908
  -4,159
  -4,421
  -4,694
  -4,978
  -5,274
  -5,582
  -5,904
  -6,240
  -6,591
  -6,957
  -7,340
  -7,740
  -8,158
  -8,596
  -9,054
  -9,534
  -10,036
New CAPEX, $m
  -1,167
  -1,998
  -2,087
  -2,178
  -2,269
  -2,362
  -2,456
  -2,553
  -2,653
  -2,757
  -2,865
  -2,978
  -3,097
  -3,221
  -3,352
  -3,490
  -3,635
  -3,788
  -3,949
  -4,120
  -4,299
  -4,489
  -4,689
  -4,900
  -5,122
  -5,357
  -5,604
  -5,864
  -6,138
  -6,427
  -6,732
Cash from investing activities, $m
  -3,361
  -3,542
  -3,787
  -4,041
  -4,302
  -4,573
  -4,851
  -5,140
  -5,439
  -5,751
  -6,074
  -6,411
  -6,763
  -7,129
  -7,511
  -7,911
  -8,329
  -8,766
  -9,223
  -9,702
  -10,203
  -10,729
  -11,280
  -11,857
  -12,462
  -13,097
  -13,762
  -14,460
  -15,192
  -15,961
  -16,768
Free cash flow, $m
  2,256
  2,533
  3,032
  3,556
  4,106
  4,682
  5,284
  5,912
  6,566
  7,248
  7,957
  8,665
  9,433
  10,232
  11,063
  11,929
  12,830
  13,770
  14,750
  15,773
  16,840
  17,954
  19,119
  20,336
  21,610
  22,943
  24,338
  25,799
  27,329
  28,934
  30,615
Issuance/(repayment) of debt, $m
  2,560
  2,771
  2,893
  3,019
  3,145
  3,274
  3,405
  3,539
  3,678
  3,822
  3,972
  4,129
  4,293
  4,466
  4,647
  4,838
  5,039
  5,251
  5,475
  5,711
  5,960
  6,223
  6,500
  6,792
  7,101
  7,426
  7,768
  8,129
  8,510
  8,910
  9,332
Issuance/(repurchase) of shares, $m
  -3,456
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -971
  2,771
  2,893
  3,019
  3,145
  3,274
  3,405
  3,539
  3,678
  3,822
  3,972
  4,129
  4,293
  4,466
  4,647
  4,838
  5,039
  5,251
  5,475
  5,711
  5,960
  6,223
  6,500
  6,792
  7,101
  7,426
  7,768
  8,129
  8,510
  8,910
  9,332
Total cash flow (excl. dividends), $m
  1,274
  5,304
  5,925
  6,575
  7,252
  7,956
  8,689
  9,451
  10,245
  11,070
  11,929
  12,794
  13,726
  14,697
  15,710
  16,767
  17,869
  19,021
  20,225
  21,483
  22,800
  24,177
  25,619
  27,129
  28,711
  30,368
  32,106
  33,928
  35,839
  37,844
  39,947
Retained Cash Flow (-), $m
  1,220
  -642
  -679
  -708
  -738
  -768
  -799
  -830
  -863
  -897
  -932
  -969
  -1,007
  -1,048
  -1,090
  -1,135
  -1,182
  -1,232
  -1,284
  -1,340
  -1,398
  -1,460
  -1,525
  -1,593
  -1,666
  -1,742
  -1,822
  -1,907
  -1,996
  -2,090
  -2,189
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,661
  5,247
  5,867
  6,514
  7,188
  7,890
  8,621
  9,382
  10,173
  10,997
  11,826
  12,719
  13,650
  14,620
  15,632
  16,687
  17,790
  18,941
  20,144
  21,402
  22,717
  24,094
  25,536
  27,045
  28,626
  30,284
  32,021
  33,843
  35,754
  37,758
Discount rate, %
 
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
 
  4,304
  4,439
  4,512
  4,513
  4,445
  4,312
  4,120
  3,877
  3,592
  3,275
  2,931
  2,586
  2,242
  1,909
  1,595
  1,307
  1,049
  824
  633
  475
  348
  248
  172
  116
  76
  48
  30
  18
  10
  6
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Lowe's Companies, Inc. (Lowe's) is a home improvement company. The Company operates approximately 2,370 home improvement and hardware stores. The Company offers a range of products for maintenance, repair, remodeling and decorating. The Company offers home improvement products in categories, including Lumber and Building Materials; Tools and Hardware; Appliances; Fashion Fixtures; Rough Plumbing and Electrical; Lawn and Garden; Seasonal and Outdoor Living; Paint; Flooring; Millwork, and Kitchens. The Company also supports the communities that focus on K-12 public education and community improvement projects. The Company serves its customers in the United States, Canada and Mexico.

FINANCIAL RATIOS  of  Lowe's (LOW)

Valuation Ratios
P/E Ratio 24.3
Price to Sales 1.2
Price to Book 11.7
Price to Tangible Book
Price to Cash Flow 13.4
Price to Free Cash Flow 16.9
Growth Rates
Sales Growth Rate 10.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.5%
Cap. Spend. - 3 Yr. Gr. Rate 4.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 223.7%
Total Debt to Equity 244%
Interest Coverage 9
Management Effectiveness
Return On Assets 10.5%
Ret/ On Assets - 3 Yr. Avg. 9.7%
Return On Total Capital 14.6%
Ret/ On T. Cap. - 3 Yr. Avg. 13.1%
Return On Equity 43.9%
Return On Equity - 3 Yr. Avg. 32.5%
Asset Turnover 2
Profitability Ratios
Gross Margin 34.6%
Gross Margin - 3 Yr. Avg. 34.7%
EBITDA Margin 11.4%
EBITDA Margin - 3 Yr. Avg. 11.3%
Operating Margin 9%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 8%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate 40.5%
Eff/ Tax Rate - 3 Yr. Avg. 39.9%
Payout Ratio 36.2%

LOW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LOW stock intrinsic value calculation we used $65017 million for the last fiscal year's total revenue generated by Lowe's. The default revenue input number comes from 2017 income statement of Lowe's. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LOW stock valuation model: a) initial revenue growth rate of 10.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.3%, whose default value for LOW is calculated based on our internal credit rating of Lowe's, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Lowe's.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LOW stock the variable cost ratio is equal to 85.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3820 million in the base year in the intrinsic value calculation for LOW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.4% for Lowe's.

Corporate tax rate of 27% is the nominal tax rate for Lowe's. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LOW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LOW are equal to 30.4%.

Life of production assets of 12.8 years is the average useful life of capital assets used in Lowe's operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LOW is equal to 1.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6434 million for Lowe's - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 832.834 million for Lowe's is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Lowe's at the current share price and the inputted number of shares is $72.2 billion.

RELATED COMPANIES Price Int.Val. Rating
HD Home Depot 182.58 104.26  sell
BLDR Builders First 20.05 13.53  sell
JCTCF Jewett-Cameron 15.40 3.07  str.sell
BMCH BMC Stock Hold 23.35 3.13  str.sell

COMPANY NEWS

▶ 3 Attractive Income Stocks Whose Dividends Could Double   [Dec-17-17 08:07AM  Motley Fool]
▶ What to Expect from Lowes Earnings in the Next 4 Quarters   [Dec-15-17 04:25PM  Market Realist]
▶ Analysts Expect Lowes Revenue to Rise   [02:55PM  Market Realist]
▶ Whats Driving Lowes Stock Price?   [01:21PM  Market Realist]
▶ Forget Lowe's -- Home Depot Is the Better Dividend Stock   [Dec-13-17 05:13PM  Motley Fool]
▶ Will 2018 Be Home Depot Inc's Best Year Yet?   [Dec-08-17 07:24PM  Motley Fool]
▶ ETFs with exposure to Lowes Cos., Inc. : December 7, 2017   [Dec-07-17 02:16PM  Capital Cube]
▶ Stocks With Rising Relative Strength: Lowes Companies   [Dec-05-17 03:00AM  Investor's Business Daily]
▶ Understanding Home Depot and Lowes Dividend Policies   [Nov-30-17 10:31AM  Market Realist]
▶ What to Expect From Home Depot Inc. in 2018   [Nov-29-17 01:18PM  Motley Fool]
▶ How Safe Is Lowe's (LOW) Dividend?   [09:00AM  Motley Fool]
▶ 3 Top Retail Stocks to Buy Now   [Nov-27-17 09:35PM  Motley Fool]
▶ Five big movers in the blitz   [01:36PM  CNBC Videos]
▶ Lowes Earnings per Share Outperform Wall Street Estimates   [Nov-23-17 10:32AM  Market Realist]
▶ Why Lowes Net Margins Expanded in 3Q17   [09:02AM  Market Realist]
▶ How Lowes Same-Store Sales Growth Performed in 3Q17   [Nov-22-17 05:20PM  Market Realist]
▶ What Drove Lowes Revenue in 3Q17   [03:50PM  Market Realist]
▶ Why Lowes 3Q17 Earnings Failed to Impress   [02:16PM  Market Realist]
▶ Is Retail Making a Comeback?   [12:51PM  Motley Fool]
▶ Best Black Friday Deals at Home Depot and Lowe's 2017   [Nov-21-17 07:30PM  Kiplinger]
▶ Five big movers in the blitz   [02:04PM  CNBC Videos]
▶ Lowe's Leaves Its 2017 Outlook Unchanged   [12:32PM  Motley Fool]
▶ Also-Ran Lowe's Looks Undervalued   [12:16PM  Morningstar]
▶ Why Lowes Earnings Wont Invigorate Investors   [07:50AM  24/7 Wall St.]
▶ Lowe's beats Street, Q3 comps up 5.7%   [06:20AM  CNBC Videos]
▶ Lowe's vs. Home Depot: Which is the better buy?   [Nov-20-17 03:49PM  CNBC Videos]
▶ Get Long on Lowe's   [02:09PM  TheStreet.com]
▶ Stay focused on individual companies   [Nov-17-17 08:34PM  CNBC Videos]
▶ What Drove Home Depots Revenue in 3Q17?   [10:00AM  Market Realist]
Financial statements of LOW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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