Lowe's (LOW) AI Stock Analysis

• Market Cap: $145.11B
• Dividend Yield: 1.76%
• Average Volume (3M): 2.89M
• Price to Earnings (P/E): 21.3
• Beta (1Y): 0.84
• Revenue Growth: -0.49%
• EPS Growth: 0.83%
• Country: US
• Employees: 161,000
• Sector: Consumer Cyclical
• Sector Strength: 80
• Industry: Home Improvement
• EPS (TTM): 4.33
• Shares Outstanding: 560,824,900
• 10 Day Avg. Volume: 2,681,412
• 30 Day Avg. Volume: 2,894,289
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 1.92
• Enterprise Value/Gross Profit: 6.13
• Enterprise Value/Ebitda: 12.94
• 1Y Price Target: $283.60
• Price Target Upside: 7.19% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

• Rating: 69 Neutral
• Price Target: $289.00 ▲(9.23% Upside)

Lowe's overall stock score reflects strong technical momentum and positive earnings call sentiment, offset by financial risks due to high leverage. The valuation is fair, but not compelling. Strategic initiatives and online growth are positives, but balance sheet concerns need addressing.

Positive Factors

Acquisition Strategy

The acquisition of FBM expands Lowe's total addressable market and emphasizes its growth strategy under CEO Marvin Ellison.

Financial Performance

Shares of LOW traded up after reporting an EPS beat, updating FY25 guidance, and announcing an agreement to acquire Foundation Building Materials.

Market Position

LOW's Q2'25 results keep the Home Improvement upside optionality thesis intact, with better-than-expected US comps and a gross margin beat.

Negative Factors

Growth Challenges

Achieving sustained growth above 3% seems challenging without lower interest rates, and there is uncertainty about the impact of inflation on this scenario.

Integration Challenges

The wholesale distribution segment expansion through the acquisition is seen as a strategic move, similar to HD's approach, with potential integration challenges acknowledged.

Leverage and Repurchases

LOW's acquisition of Foundation Building Materials will raise the company's leverage to 3.4x-3.5x, and share repurchases will be paused for the next ~24 months.

Lowe's Business Overview & Revenue Model

Company Description

Lowe's Companies, Inc. is a leading American home improvement retailer that operates a chain of retail stores offering a wide range of products and services for home improvement, repair, and maintenance. Founded in 1946, Lowe's serves both DIY (do-it-yourself) consumers and professional contractors, providing an extensive selection of building materials, tools, appliances, and home décor items. The company operates in the home improvement sector and is known for its commitment to customer service and community involvement.

How the Company Makes Money

Lowe's generates revenue primarily through the sale of home improvement products and services across its retail locations and online platform. The key revenue streams include sales of building materials, tools, hardware, home decor, and appliances to both individual consumers and contractors. Lowe's also offers installation services for various products, further enhancing its revenue potential. The company benefits from strategic partnerships with major brands and suppliers, allowing it to offer a diverse range of products. Additionally, Lowe's has expanded its online presence, providing e-commerce capabilities that cater to a growing segment of customers who prefer shopping online. Seasonal promotions, loyalty programs, and credit services also contribute significantly to its earnings, as they encourage repeat business and higher average transaction values.

Lowe's Financial Statement Overview

Summary

Lowe's financial performance is mixed. While revenue and gross profit margins are stable, high leverage and negative equity pose financial risks. Strong cash flow is a positive, but balance sheet concerns need addressing for long-term stability.

Income Statement

Lowe's has shown a mixed performance in its income statement. The TTM data indicates a slight revenue growth, but the net profit margin has decreased compared to previous periods. The gross profit margin remains stable, suggesting efficient cost management. However, the EBIT and EBITDA margins have slightly declined, indicating potential pressure on operating efficiency.

Balance Sheet

The balance sheet reveals significant leverage, with a negative stockholders' equity leading to a high debt-to-equity ratio. This indicates potential financial risk. The return on equity is negative, reflecting challenges in generating returns for shareholders. The equity ratio is also negative, suggesting a reliance on debt financing.

Cash Flow

Cash flow analysis shows a positive trend in free cash flow growth in the TTM period, indicating improved cash generation capabilities. The operating cash flow to net income ratio is stable, suggesting good cash conversion from earnings. However, the free cash flow to net income ratio has slightly decreased, indicating some pressure on cash flow relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	83.61B	83.67B	86.38B	97.06B	96.25B	89.60B
Gross Profit	26.20B	26.15B	27.13B	30.49B	30.39B	28.17B
EBITDA	12.41B	12.59B	13.57B	12.69B	14.47B	10.68B
Net Income	6.86B	6.96B	7.73B	6.44B	8.44B	5.83B
Balance Sheet
Total Assets	46.61B	44.57B	43.36B	45.27B	46.33B	48.29B
Cash, Cash Equivalents and Short-Term Investments	5.26B	2.13B	1.23B	1.73B	1.40B	5.20B
Total Debt	39.06B	39.68B	40.15B	37.99B	29.38B	26.21B
Total Liabilities	58.01B	58.80B	58.41B	59.53B	51.15B	46.85B
Stockholders Equity	-11.40B	-14.23B	-15.05B	-14.25B	-4.82B	1.44B
Cash Flow
Free Cash Flow	7.69B	7.70B	6.18B	6.76B	8.26B	9.26B
Operating Cash Flow	9.82B	9.63B	8.14B	8.59B	10.11B	11.05B
Investing Cash Flow	-3.28B	-1.74B	-1.90B	-1.31B	-1.65B	-1.89B
Financing Cash Flow	-6.04B	-7.05B	-6.67B	-7.05B	-12.02B	-5.19B

Lowe's Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 264.57
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LOW, the sentiment is Positive. The current price of 264.57 is above the 20-day moving average (MA) of 254.25, above the 50-day MA of 236.55, and above the 200-day MA of 237.85, indicating a bullish trend. The MACD of 7.45 indicates Positive momentum. The RSI at 71.82 is Negative, neither overbought nor oversold. The STOCH value of 60.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LOW.

Lowe's Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSCO	80 Outperform	$32.60B	30.26	45.34%	1.51%	2.96%	-2.02%
WSM	76 Outperform	$23.38B	21.10	51.75%	1.21%	3.28%	9.29%
HD	75 Outperform	$404.44B	27.60	193.95%	2.22%	8.52%	-0.97%
BBY	70 Outperform	$15.74B	18.20	30.21%	4.91%	-3.23%	-28.11%
LOW	69 Neutral	$145.11B	21.26	-51.07%	1.76%	-0.49%	0.83%
FND	68 Neutral	$8.51B	40.27	9.73%	―	4.88%	0.05%
Sector *	61 Neutral	$17.96B	13.14	-5.36%	3.00%	1.25%	-13.95%

Lowe's Corporate Events

Lowe’s Announces Acquisition of Foundation Building Materials

On August 19, 2025, Lowe’s Companies, Inc. announced an agreement to acquire Foundation Building Materials (FBM) for $8.8 billion. FBM is a major North American distributor of interior building products, and this acquisition is expected to enhance Lowe’s offerings for professional customers, aligning with its Total Home strategy. The transaction, anticipated to close in the fourth quarter of 2025, is expected to be accretive to adjusted diluted earnings per share in the first full year post-closing. Lowe’s plans to finance the acquisition through a combination of short-term and long-term debt, maintaining its current credit ratings. This strategic move positions Lowe’s for long-term sustainable sales growth and profit expansion, significantly enhancing its Pro customer offerings.

Lowe’s Annual Shareholder Meeting Outcomes Announced

On May 30, 2025, Lowe’s held its annual shareholder meeting where various proposals were voted on. Key outcomes included the election of directors and approval of executive compensation for fiscal 2024. Additionally, Deloitte & Touche LLP was ratified as the independent registered public accounting firm for fiscal 2025. These decisions reflect the company’s ongoing governance and operational strategies, potentially impacting its market positioning and stakeholder relations.