Signal Ledger valuation · LOW
Lowe's Companies Inc
What the shares are worth today on our research (cited consensus, company plans and peers, since management sets no usable targets): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jul 31, 2026.
- Business value at FY2030
- $189B
- FY2030 revenue
- $99B
- FY2030 EPS · P/E
- $16.54 · 19×
- Discount rate (WACC · equity)
- 7.47% · 8.86%
How this is built. Latest outlook supersedes pre-acquisition financial assumptions; FY2026 management guidance and FY2027 consensus anchor a housing mid-cycle research estimate without compounding acquisition growth indefinitely. Each input below shows its basis: consensus, company plan, peer or rule.
Latest quarter in this research: Q2 FY2026
Reported Aug 19, 2026 for the quarter to Jul 31, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Retail Home Improvement | $24.0B | +0.8% | $3.55B | 14.8% |
| Other businesses | $1.94B | +1307% | $3M | 0.2% |
- Comparable sales +0.2%; online sales +15.7%.
- Consolidated sales +8.3%, driven largely by acquisition consolidation.
- GAAP margin 13.67%; FY2026 margin outlook 11.2%.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Retail Home Improvement | Margin | $91B | $173B | $308.70 | 14.3× EBIT | 68% |
| Other businesses · FBM and ADG | Margin | $8.6B | $0.6B | $0.99 | 10.5× EBIT | 84% |
| All businesses | $99B | $174B | $309.69 |
From 2030 back to today
- Enterprise value at end of FY2030$189B
- Less net debt at FY2030$16B
- Equity value at FY2030$173B
- ÷ (1 + 8.86%)^3.5 years at the cost of equity$128B
- + dividends paid on the way, discounted$8.2B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 2.2%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$174B
- − borrowings$38B
- − finance leases$0B
- + cash and short-term investments$3.4B
- ÷ diluted shares0.561B
- Signal Ledger valuation$248.82
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2027 | $92B | $13B | $2.5B | $7.6B | $32B |
| FY2028 | $94B | $14B | $2.6B | $8.3B | $28B |
| FY2029 | $97B | $15B | $2.6B | $9.1B | $22B |
| FY2030 | $99B | $16B | $2.7B | $9.8B | $16B |
What must be true
- Retail Home Improvement grows revenue from $84.1B in FY2027 to $90.8B in FY2030 (1.1×).
- Other businesses · FBM and ADG grows revenue from $7.9B in FY2027 to $8.6B in FY2030 (1.1×).
- Retail Home Improvement raises its EBIT margin from 12.3% to 14.5%.
- Other businesses · FBM and ADG raises its EBIT margin from -0.8% to 0.8%.
- The company spends $10.4B of capital expenditure through FY2030.
- Net debt peaks at $34.1B in FY2026 and stays financeable.
What the price implies
At our discount rate, the price assumes less than our research overall: one combination matching $204.37 is about $84.1B of FY2030 sales (a decline of about 0.6% a year from FY2026) with 13.3% GAAP EBIT margin — versus $99.4B and 13.3% GAAP EBIT margin in our research.
At the research price of $204.37 (2026-10-23), the price asks less than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
If sales and margins changed together
Each row matches the same research price at our unchanged discount rate, by scaling every operating line's margin by one common factor. Sales cover margin and capacity lines only; other valuation lines stay fixed. Margins are revenue-weighted within each metric, before separately modeled corporate costs and eliminations. The conclusion uses the row at our research margins when sales alone can match the price, otherwise the solved row needing the least sales growth; this is a trade-off between growth and profitability, not a forecast.
| FY2030 sales factor | FY2030 sales | FY2026–30 CAGR | Required FY2030 margin | Requirement |
|---|---|---|---|---|
| 0.85×At research margins | $84.1B | −0.6% | 13.3% GAAP EBIT | Within margin guardrails |
| 1.50× | $149B | 14.6% | 7.9% GAAP EBIT | Within margin guardrails |
| 2.00× | $198.7B | 23.2% | 6.0% GAAP EBIT | Within margin guardrails |
| 3.00× | $298.1B | 36.3% | 4.1% GAAP EBIT | Within margin guardrails |
CAGR uses $86.3B of same-scope FY2026 sales from the published model or its sourced research base, over four fiscal years. “Within margin guardrails” checks numeric limits only, not commercial plausibility. Each line and year must stay at or below 50.0% GAAP EBIT and 100% EBITDA, or our research margin where that is higher; capacity EBIT uses the engine's equipment depreciation. Unsolved margins are not extrapolated.
- Implied discount rate
- 8.4%
- All-business FY2030 sales factor
- 0.85×
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 7.5% WACC · 8.9% cost of equity.
FY2030 revenue would need to reach $84.1B (model: $99.4B) across the margin and capacity businesses. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
If only one business changed
Businesses with margin or capacity revenue paths, ordered by value today. Revenue and margin are separate alternatives; these requirements are not added together.
Retail Home Improvement
- Revenue alone
- FY2030 revenue would need to reach $77.4B (model: $90.8B).
- Margin alone
FY2030 EBIT margin would need to reach 12.4% (model: 14.5%).
Other businesses · FBM and ADG
- Revenue alone
- This business alone cannot get there within the search range.
- Margin alone
- This business alone cannot get there within the search range.
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 8.86%
- WACC
- 7.47%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.00 = 0.8 floor relevered for debt/equity 0.33 (§4.5 leverage rule) × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 18 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Revenue FY2027Retail Home Improvement | $84.1B | Guidance | target (methodology §4.2), growth 0.0% stockanalysis.com ↗ |
| Revenue FY2030Retail Home Improvement | $90.8B | Guidance | hold moderate (methodology §4.2), growth 2.6% stockanalysis.com ↗ |
| EBIT margin FY2030Retail Home Improvement | 14.5% | Guidance | linear path to 14.5% by FY2030 (management target) stockanalysis.com ↗ |
| Maintenance capexRetail Home Improvement | 2.7% | Guidance | $2.5B FY2026 capex ceiling / $92B sales; intensity held thereafter as a research assumption. sec.gov ↗ |
| Terminal growthRetail Home Improvement | 2.0% | Rule | methodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗ |
| Revenue FY2027Other businesses · FBM and ADG | $7.9B | Rule | target (methodology §4.2), growth 258.8% stockanalysis.com ↗ |
| Revenue FY2030Other businesses · FBM and ADG | $8.6B | Guidance | hold moderate (methodology §4.2), growth 2.6% stockanalysis.com ↗ |
| EBIT margin FY2030Other businesses · FBM and ADG | 0.8% | Rule | linear path to 0.8% by FY2030 (§4.3 E2: 4.0000 points = 4pp × clamp((CAGR − 1.5%) / 2%, 0, 1); revenue CAGR 40.3% to FY2030; no cited expansion evidence) sec.gov ↗ |
| Maintenance capexOther businesses · FBM and ADG | 2.7% | Guidance | $2.5B FY2026 capex ceiling / $92B sales; intensity held thereafter as a research assumption. sec.gov ↗ |
| Terminal growthOther businesses · FBM and ADG | 2.0% | Rule | methodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 7.47% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 8.86% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.00 = 0.8 floor relevered for debt/equity 0.33 (§4.5 leverage rule) × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 24.5% | Guidance | Latest management effective-tax-rate outlook, midpoint where a range. sec.gov ↗ |
| Cash and short-term investmentsBalance sheet | $3.4B | Reported | cash, cash equivalents and short-term investments; use consolidated short-term investment total once, including all security classes sec.gov ↗ |
| BorrowingsBalance sheet | $37.6B | Reported | borrowings due within a year plus long-term borrowings us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent · 0000060667-26-000117 + us-gaap:LongTermDebtAndCapitalLeaseObligations · 0000060667-26-000117 |
| Finance leasesBalance sheet | $0.0B | Reported | finance leases not separately tagged; retained inside combined debt, with no additional lease deduction balance sheet 2026-07-31 |
| SharesBalance sheet | 0.561B | Reported | shares outstanding as of 2026-08-25 cover page of 10-Q 0000060667-26-000117 |
| Dividends per yearShareholders | $2.7B | Reported | Prior complete-year $4.75 minus first-half prior-year $2.35 plus current H1 declared $2.45 = $4.85 trailing declared dividends. × 0.561B shares sec.gov ↗ · sec.gov ↗ |
Research notes
- share-count comparison: 0.56B quarter 2026-05-02..2026-07-31 · 0000060667-26-000117; point-in-time denominator retained
- cost of equity 8.86% (β 1.00 = 0.8 floor relevered for debt/equity 0.33 (§4.5 leverage rule)), WACC 7.5%
- §4.5 leverage: D/E 0.328, net debt/EBITDA 2.77, β_lev 0.998, β 0.920 → 0.998; D $37.56B, E $114.66B, cash $3.41B, base EBITDA $12.35B
- Other businesses · FBM and ADG: terminal value is 84% of value
Signal Ledger research built from cited consensus, company plans and peer economics because management sets no usable targets — not a forecast and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →