LOWES COMPANIES INC (LOW) Stock Analysis
LOWES COMPANIES INC (LOW) Stock Analysis
Analysis from 10-Q filed 2025-11-26. Data as of Q1 2026.
Overall Grade: F (Concerning)
LOWES COMPANIES INC faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 28.6% | Above industry average |
| FCF Margin | 8.9% | Healthy cash flow |
| Debt/Equity | -3.8x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 28.6% suggests durable competitive advantages and efficient capital allocation.
Explore LOWES COMPANIES INC: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: LOWES COMPANIES INC earns 28.6% ROIC, Top 5% in Consumer Discretionary
LOWES COMPANIES INC's trailing-twelve-month ROIC of 28.6% ranks Top 5% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 9.0% combined with asset turnover of 1.8x. Source: 10-Q filed 2025-11-26. Gross margin of 33.5% with operating margin at 11.8% reflects a competitive pricing environment.
| Metric | LOW | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.6% | Excellent | Above sector median of 8.8% |
| Return on Equity (ROE) | -56.3% | Red flag | Moderate equity returns |
| Gross Margin | 33.5% | Good | Competitive pricing environment |
| Operating Margin | 11.8% | Good | Moderate operational efficiency |
Cash Flow: LOWES COMPANIES INC generates $7.7B FCF at 8.9% margin, positive NaN/8 quarters
LOWES COMPANIES INC generated $7.7B in free cash flow (TTM), a 8.9% FCF margin, a margin that ranks Top 25% in Consumer Discretionary. Operating cash flow exceeds net income by 1.5x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-26.
| Metric | LOW | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 8.9% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $7.7B | Good | Positive cash generation |
| OCF/Net Income | 1.5x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: LOWES COMPANIES INC at -3.8x leverage
LOWES COMPANIES INC's debt-to-equity ratio of -3.8x reflects conservative leverage. Total debt of $37.5B offset by $1.4B in cash. Source: 10-Q filed 2025-11-26.
| Metric | LOW | Rating | Context |
|---|---|---|---|
| Debt to Equity | -3.8x | Excellent | Conservative capital structure |
| Net Cash Position | $-36.1B | Warning | Net debt position |
Valuation: LOWES COMPANIES INC trades at 22.5x earnings
LOWES COMPANIES INC trades at a P/E of 22.5x. Free cash flow yield of 5.1% offers attractive cash returns relative to price.
| Metric | LOW | Rating | Context |
|---|---|---|---|
| P/E Ratio | 22.5x | Adequate | Premium valuation |
| EV/Sales | 2.1x | Good | Attractive revenue multiple |
| FCF Yield | 5.1% | Good | Attractive cash return |
| Dividend Yield | 1.8% | Adequate | Growth focus over income |
Capital Allocation: LOWES COMPANIES INC returns 1.9% shareholder yield
LOWES COMPANIES INC's total shareholder yield is 1.9% (dividends 1.8% + buybacks 0.1%). Source: 10-Q filed 2025-11-26.
| Metric | LOW | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 1.9% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 0.1% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $2.8B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.6% | Top 5% | 3.3x above |
| Free Cash Flow Margin | 8.9% | Top 25% | 3.3x above |
| Gross Margin | 33.5% | Bottom 50% | 0.8x below |
| Operating Margin | 11.8% | Top 25% | 2.5x above |
| Return on Equity (ROE) | -56.3% | Top 5% | -5.3x below |
| P/E Ratio | 22.5x | N/A | - |
Financial Scorecard
| Metric | LOW | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.6% | Excellent | Top 5% of sector (median: 8.8%) |
| Free Cash Flow Margin | 8.9% | Adequate | Top 25% of sector (median: 2.7%) |
| Gross Margin | 33.5% | Good | Bottom 50% of sector (median: 39.5%) |
| Debt to Equity Ratio | -378.0% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 22.5x | Adequate | Fair value |
| Free Cash Flow Yield | 5.1% | Good | Solid cash yield |
Frequently Asked Questions
Q: What is LOWES COMPANIES INC's Return on Invested Capital (ROIC)?
LOWES COMPANIES INC (LOW) has a trailing twelve-month Return on Invested Capital (ROIC) of 28.6%. This compares above the sector median of 8.8%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is LOWES COMPANIES INC's Free Cash Flow Margin?
LOWES COMPANIES INC (LOW) has a free cash flow margin of 8.9%, generating $7.7 billion in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is LOWES COMPANIES INC stock overvalued or undervalued?
LOWES COMPANIES INC (LOW) trades at a P/E ratio of 22.5x, which is above the sector median of N/A. The EV/Sales multiple is 2.1x. Free cash flow yield is 5.1%, which is in line with market averages.
Q: Does LOWES COMPANIES INC pay a dividend?
LOWES COMPANIES INC (LOW) currently pays a dividend yield of 1.8%. Including share buybacks, the total shareholder yield is 1.9%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: What is LOWES COMPANIES INC's revenue and earnings growth?
LOWES COMPANIES INC (LOW) grew revenue by 3.1% year-over-year. Earnings per share decreased by 3.1% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is LOWES COMPANIES INC buying back stock?
LOWES COMPANIES INC (LOW) repurchased $211.0 million of stock over the trailing twelve months. This represents a buyback yield of 0.1%.
Q: How does LOWES COMPANIES INC compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, LOWES COMPANIES INC (LOW) shows: ROIC of 28.6% is above the sector median of 8.8% (Top 5%). FCF margin of 8.9% exceeds the sector median of 2.7% (Top 19% of sector). Gross margin at 33.5% is 6.1 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with LOWES COMPANIES INC?
Investors in LOWES COMPANIES INC (LOW) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-26. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.