February 28, 2016
NYSE: LOW
LOWE'S COMPANIES INC
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$1.12
B-
C+
C
Annual Dividend Yield
1.63%
SELL
C-
D+
D
Beta
1.08
Sector: Consumer Goods & Svcs
LOW BUSINESS DESCRIPTION
Lowe's Companies, Inc. operates as a home
improvement retailer. The company offers products
for maintenance, repair, remodeling, and home
decorating.
Weekly Price: (US$)
D-
E+
E
E-
F
Market Capitalization
$62.5 Billion
BUY
52-Week Range
$62.62-$78.13
Sub-Industry: Home Improvement Retail
SMA (50)
RATING SINCE
TARGET PRICE
01/10/2012
$87.48
Price as of 2/25/2016
$68.70
Source: S&P
SMA (100)
1 Year
2 Years
90
TARGET
TARGET
TARGETPRICE
PRICE
PRICE$87.48
$87.48
$87.48
85
80
75
STOCK PERFORMANCE (%)
3 Mo.
Price Change
-11.49
1 Yr.
-7.70
70
3 Yr (Ann)
24.20
65
60
GROWTH (%)
Last Qtr
5.54
-97.56
-97.83
Revenues
Net Income
EPS
RETURN ON EQUITY (%)
LOW
Q4 2015
33.26
Q4 2014
27.06
Q4 2013
19.28
12 Mo.
5.07
-5.64
0.37
3 Yr CAGR
5.35
9.13
17.28
55
50
45
Rating History
BUY
Ind Avg
45.80
240.49
24.31
S&P 500
12.28
14.59
13.97
Volume in Millions
60
40
20
2014
2015
2016
0
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate LOWE'S COMPANIES INC (LOW) a BUY. This is driven by multiple strengths, which we believe should
have a greater impact than any weaknesses, and should give investors a better performance opportunity than
most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth
and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster
performance in the stock itself.
25.35
27.13
21.53
LOW
Ind Avg
S&P 500
HIGHLIGHTS
Despite its growing revenue, the company underperformed as compared with the industry average of 7.0%.
Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue does not
appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
2013
2014
Q4 0.01
Q3 0.80
Q2 1.20
Q1 0.70
Q4 0.46
Q3 0.59
Q2 1.04
LOWE'S COMPANIES INC has experienced a steep decline in earnings per share in the most recent quarter in
comparison to its performance from the same quarter a year ago. Stable earnings per share over the past
year indicate the company has sound management over its earnings and share float. We anticipate these
figures will begin to experience more growth in the coming year. During the past fiscal year, LOWE'S
COMPANIES INC increased its bottom line by earning $2.71 versus $2.70 in the prior year. This year, the
market expects an improvement in earnings ($4.00 versus $2.71).
Q1 0.61
Q4 0.29
Q3 0.47
Q2 0.88
Q1 0.49
EPS ANALYSIS¹ ($)
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of
strength within the company. In comparison to other companies in the Specialty Retail industry and the
overall market on the basis of return on equity, LOWE'S COMPANIES INC has underperformed in comparison
with the industry average, but has greatly exceeded that of the S&P 500.
The gross profit margin for LOWE'S COMPANIES INC is currently lower than what is desirable, coming in at
34.66%. LOW has continued with the weak profit margin when compared to the same quarter of last year.
Despite the mixed results of the gross profit margin, the net profit margin of 0.08% trails the industry average.
Net operating cash flow has declined marginally to $238.00 million or 2.85% when compared to the same
quarter last year. Despite a decrease in cash flow of 2.85%, LOWE'S COMPANIES INC is in line with the
industry average cash flow growth rate of -6.05%.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NYSE: LOW
LOWE'S COMPANIES INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$1.12
Annual Dividend Yield
1.63%
PEER GROUP ANALYSIS
20%
REVENUE GROWTH AND EBITDA MARGIN*
AAN
R
VO
FA
LE
AB
-15%
Price as of 2/25/2016
$68.70
INDUSTRY ANALYSIS
The specialty retail industry includes very well-known home improvement, apparel, automotive, and other
narrow-focus stores such as Home Depot (HD), TJX Companies (TJX), Lowe’s Companies (LOW), Gap (GPS),
Bed Bath & Beyond (BBBY), Ross Stores (ROST), Limited Brands (LTD), O’Reilly Automotive (ORLY), PetSmart
(PETM), Carmax (KMX), and Build-A-Bear Workshop (BBW).
Some of the larger specialty retail companies also profit from the extension of credit to their customers with
branded credit cards.
Companies in this industry are judged based on the metric of same-store sales, a measurement that shows if
stores open for more than one year are increasing top line revenue or shrinking.
UN
Revenue Growth (TTM)
AEO
LL SHOS
BKS
ARCI
52-Week Range
$62.62-$78.13
The variety of product focuses targeted by specialty retail companies is very diverse. These include but are
not limited to home improvement goods, pharmaceutical & beauty, shoes, electronics, and office supplies.
Also included are stores narrowly focused on music, books, wine, games, rentals, vitamins, lumber, sporting
goods, toys, jewelry, and fashion apparel for men, women, and teddy bears.
LE
HD
LOW
AB
OR
AN
Market Capitalization
$62.5 Billion
V
FA
TTS
Beta
1.08
ANF
-5%
45%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $5.1 Million and $160.8
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
20%
REVENUE GROWTH AND EARNINGS YIELD
AAN
V
FA
AB
OR
TTS
PEER GROUP: Specialty Retail
Ticker
LOW
BKS
TTS
AN
ARCI
LL
AEO
ANF
AAN
HD
SHOS
Recent
Company Name
Price ($)
LOWE'S COMPANIES INC
68.70
BARNES & NOBLE INC
9.12
TILE SHOP HOLDINGS INC
13.13
AUTONATION INC
51.94
APPLIANCE RECYCLING CTR AMER 0.86
LUMBER LIQUIDATORS HLDGS INC 11.24
AMERN EAGLE OUTFITTERS INC
14.92
ABERCROMBIE & FITCH
28.20
AARON'S INC
22.81
HOME DEPOT INC
126.86
SEARS HOMETOWN & OUTLET STR 6.66
Market
Cap ($M)
62,517
697
675
5,569
5
304
2,904
1,895
1,656
160,843
151
Price/
Earnings
25.35
NM
43.77
13.35
NM
NM
14.49
90.97
12.20
23.23
NM
Net Sales
TTM ($M)
59,074.00
5,018.44
292.99
20,862.00
117.59
1,015.95
3,487.87
3,525.29
3,179.76
88,519.00
2,311.86
Net Income
TTM ($M)
2,546.00
-21.35
15.70
442.60
-2.48
-19.26
198.04
22.22
135.71
7,009.00
-4.79
The peer group comparison is based on Major Home Improvement Retail companies of comparable size.
LE
LL
SHOS BKS
R
VO
FA
ARCI
LE
AB
-15%
UN
Revenue Growth (TTM)
AN
AEOHD
LOW
-50%
ANF
10%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -10.9% and
18%. Companies with NA or NM values do not
appear.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NYSE: LOW
LOWE'S COMPANIES INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$1.12
Annual Dividend Yield
1.63%
COMPANY DESCRIPTION
Lowe's Companies, Inc. operates as a home improvement
retailer. The company offers products for maintenance,
repair, remodeling, and home decorating. It provides
home improvement products under the categories of
kitchens and appliances; lumber and building materials;
tools and hardware; fashion fixtures; rough plumbing and
electrical; lawn and garden; seasonal living; paint; home
fashions; storage and cleaning; flooring; millwork; and
outdoor power equipment. The company also offers
installation services through independent contractors in
various product categories; extended protection plans;
and in-warranty and out-of-warranty repair services. It
provides national brand-name merchandise and private
branded products. The company serves individual
homeowners and renters, including do-it-yourself
customers and do-it-for-me customers; and professional
customers, such as construction trades, as well as
maintenance, repair, and operations. As of October 30,
2015, it operated 1,849 home improvement and
hardware stores in the United States, Canada, and
Mexico. The company also sells its products through
online sites comprising Lowes.com, Lowes.ca, and
ATGstores.com, as well as through mobile applications.
Lowe's Companies, Inc. was founded in 1946 and is
based in Wilkesboro, North Carolina.
LOWE'S COMPANIES INC
1605 Curtis Bridge Road
Wilkesboro, NC 28697
USA
Phone: 704-757-9210
Fax: 336-658-4766
http://www.lowes.com
Employees: 270000
Beta
1.08
Market Capitalization
$62.5 Billion
52-Week Range
$62.62-$78.13
Price as of 2/25/2016
$68.70
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of LOW shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
4.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, LOW has a growth score better than 70% of
the stocks we rate.
strong
4.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 70% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
4.5
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 80% of the stocks we monitor.
strong
4.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 70% of the companies we analyze.
strong
3.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 60% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NYSE: LOW
LOWE'S COMPANIES INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$1.12
Annual Dividend Yield
1.63%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
0.84
4.00 E
4.68 E
Q1 FY16
2017(E)
2018(E)
Beta
1.08
Market Capitalization
$62.5 Billion
52-Week Range
$62.62-$78.13
Price as of 2/25/2016
$68.70
FINANCIAL ANALYSIS
LOWE'S COMPANIES INC's gross profit margin for the fourth quarter of its fiscal year 2015 is essentially
unchanged when compared to the same period a year ago. Even though sales increased, the net income has
decreased. LOWE'S COMPANIES INC has very weak liquidity. Currently, the Quick Ratio is 0.07 which clearly
shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same
period last year.
During the same period, stockholders' equity ("net worth") has decreased by 23.21% from the same quarter
last year. The key liquidity measurements indicate that the company is in a position in which financial
difficulties could develop in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q4 FY15
13,236.00
807.00
438.00
11.00
Q4 FY14
12,541.00
1,181.00
819.00
450.00
Q4 FY15
712.00
31,266.00
12,649.00
7,654.00
Q4 FY14
591.00
31,827.00
11,367.00
9,968.00
Q4 FY15
34.66%
6.09%
3.31%
1.89
8.14%
33.26%
Q4 FY14
34.66%
9.41%
6.53%
1.77
8.47%
27.06%
Q4 FY15
1.01
0.62
NA
NA
Q4 FY14
1.08
0.53
137.00
5.98
Q4 FY15
910
0.28
0.01
8.41
NA
5,654,970
Q4 FY14
960
0.23
0.46
10.38
NA
4,581,627
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NYSE: LOW
LOWE'S COMPANIES INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$1.12
Annual Dividend Yield
1.63%
RATINGS HISTORY
Our rating for LOWE'S COMPANIES INC has not
changed since 1/10/2012. As of 2/25/2016, the stock
was trading at a price of $68.70 which is 12.1%
below its 52-week high of $78.13 and 9.7% above its
52-week low of $62.62.
BUY: $48.11
2 Year Chart
Beta
1.08
Market Capitalization
$62.5 Billion
$80
$70
Price/Earnings
$60
$50
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/25/14
$48.11 No Change
1
2
3
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 2/25/2016)
1
2
3
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
1
2
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
5
3
4
5
Price/Sales
1
2
3
4
5
3
4
5
discount
LOW 13.07
Peers 15.49
• Discount. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• LOW is trading at a discount to its peers.
Price to Earnings/Growth
1
2
3
premium
4
5
discount
LOW 0.54
Peers 1.94
• Discount. The PEG ratio is the stock’s P/E divided
by the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• LOW trades at a significant discount to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
LOW 0.37
Peers 16.94
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, LOW is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
LOW 1.06
Peers 1.55
• Discount. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• LOW is trading at a significant discount to its
industry on this measurement.
2
premium
discount
LOW 8.17
Peers 12.59
• Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• LOW is trading at a significant discount to its peers.
premium
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
4
LOW 14.70
Peers 19.03
• Average. An average price-to-projected earnings
ratio can signify an industry neutral stock price and
average future growth expectations.
• LOW is trading at a valuation on par with its peers.
Price/Book
1
Price/CashFlow
discount
premium
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
5
discount
premium
To
Buy
4
LOW 25.35
Peers 27.13
• Average. An average P/E ratio can signify an
industry neutral price for a stock and an average
growth expectation.
• LOW is trading at a valuation on par with its peers.
Price/Projected Earnings
From
Buy
Price as of 2/25/2016
$68.70
VALUATION
BUY. The current P/E ratio indicates a discount compared to an average of 27.13 for the Specialty Retail
industry and a premium compared to the S&P 500 average of 21.53. To use another comparison, its
price-to-book ratio of 8.17 indicates a significant premium versus the S&P 500 average of 2.56 and a
significant discount versus the industry average of 12.59. The current price-to-sales ratio is well below the
S&P 500 average and is also below the industry average, indicating a discount. Upon assessment of these
and other key valuation criteria, LOWE'S COMPANIES INC proves to trade at a discount to investment
alternatives within the industry.
premium
2014
52-Week Range
$62.62-$78.13
1
2
3
lower
4
5
higher
LOW 5.07
Peers 5.35
• Average. Comparing a company's sales growth to
its industry helps to determine if the company is
adding or losing market share.
• LOW is keeping pace with its peers on the basis of
sales growth.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5