Stock Analysis on Net
Stock Analysis on Net
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Lowe’s Cos. Inc. (NYSE:LOW)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Lowe’s Cos. Inc., income tax expense (benefit), continuing operations

US$ in millions

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12 months ended: Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
Federal 1,578  935  963  1,734  1,824  1,688 
State 425  268  274  252  275  248 
Current 2,003  1,203  1,237  1,986  2,099  1,936 
Federal (73) 121  (102) 60  6  (59)
State (26) 18  (55) (4) 3  (4)
Deferred (99) 139  (157) 56  9  (63)
Income tax provision 1,904  1,342  1,080  2,042  2,108  1,873 

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Lowe’s Cos. Inc.’s current decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Lowe’s Cos. Inc.’s deferred increased from 2019 to 2020 but then slightly decreased from 2020 to 2021 not reaching 2019 level.
Income tax provision Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Lowe’s Cos. Inc.’s income tax provision increased from 2019 to 2020 and from 2020 to 2021.

Effective Income Tax Rate (EITR)

Lowe’s Cos. Inc., effective income tax rate (EITR) reconciliation

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Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
Statutory federal income tax rate 21.00% 21.00% 21.00% 33.70% 35.00% 35.00%
State income taxes, net of federal tax benefit 4.00% 4.10% 4.80% 2.90% 3.60% 3.60%
Valuation allowance 0.00% 1.30% 0.00% -0.60% 2.00% 4.20%
Goodwill impairment 0.00% 0.00% 5.50% 0.00% 0.00% 0.00%
Mexico impairment 0.00% -1.40% 1.50% 0.00% 0.00% 0.00%
Other, net -0.40% -1.10% -1.00% 1.20% -0.10% -0.40%
Effective tax rate 24.60% 23.90% 31.80% 37.20% 40.50% 42.40%

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

Item Description The company
Effective tax rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Lowe’s Cos. Inc.’s effective tax rate decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Components of Deferred Tax Assets and Liabilities

Lowe’s Cos. Inc., components of deferred tax assets and liabilities

US$ in millions

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Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
Self-insurance 284  260  252  238  352  369 
Share-based payment expense 48  30  31  36  69  83 
Deferred rent —  —  58  66  78  91 
Operating lease liabilities 1,328  1,377  —  —  —  — 
Mexico impairment —  —  74  —  —  — 
Impairment of investment —  —  —  —  381  270 
Capital loss carryforwards 225  225  223  225  —  — 
Foreign currency translation —  —  —  —  —  107 
Net operating losses 274  273  239  213  174  159 
Other, net 337  131  119  124  175  156 
Deferred tax assets 2,496  2,296  996  902  1,229  1,235 
Valuation allowance (601) (561) (569) (475) (578) (447)
Net deferred tax assets 1,895  1,735  427  427  651  788 
Operating lease assets (1,146) (1,198) —  —  —  — 
Property (382) (293) (76) (264) (417) (507)
Other, net (27) (28) (57) (23) (34) (40)
Deferred tax liabilities (1,555) (1,519) (133) (287) (451) (547)
Net deferred tax asset (liability) 340  216  294  140  200  241 

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Lowe’s Cos. Inc.’s deferred tax assets increased from 2019 to 2020 and from 2020 to 2021.
Net deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Lowe’s Cos. Inc.’s net deferred tax assets increased from 2019 to 2020 and from 2020 to 2021.
Net deferred tax asset (liability) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Lowe’s Cos. Inc.’s net deferred tax asset (liability) decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Deferred Tax Assets and Liabilities, Classification

Lowe’s Cos. Inc., deferred tax assets and liabilities, classification

US$ in millions

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Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
Deferred tax assets 340  216  294  168  222  241 
Deferred tax liabilities —  —  —  28  22  — 

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Lowe’s Cos. Inc.’s deferred tax assets decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.

Adjustments to Financial Statements: Removal of Deferred Taxes

Lowe’s Cos. Inc., adjustments to financial statements

US$ in millions

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Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
Adjustment to Total Assets
Total assets (as reported) 46,735  39,471  34,508  35,291  34,408  31,266 
Less: Noncurrent deferred tax assets, net 340  216  294  168  222  241 
Total assets (adjusted) 46,395  39,255  34,214  35,123  34,186  31,025 
Adjustment to Total Liabilities
Total liabilities (as reported) 45,298  37,499  30,864  29,418  27,974  23,612 
Less: Noncurrent deferred tax liabilities, net —  —  —  28  22  — 
Total liabilities (adjusted) 45,298  37,499  30,864  29,390  27,952  23,612 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 1,437  1,972  3,644  5,873  6,434  7,654 
Less: Net deferred tax assets (liabilities) 340  216  294  140  200  241 
Shareholders’ equity (adjusted) 1,097  1,756  3,350  5,733  6,234  7,413 
Adjustment to Net Earnings
Net earnings (as reported) 5,835  4,281  2,314  3,447  3,093  2,546 
Add: Deferred income tax expense (benefit) (99) 139  (157) 56  9  (63)
Net earnings (adjusted) 5,736  4,420  2,157  3,503  3,102  2,483 

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

Lowe’s Cos. Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Lowe’s Cos. Inc., adjusted financial ratios

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Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
Net Profit Margin
Reported net profit margin 6.51% 5.93% 3.25% 5.02% 4.76% 4.31%
Adjusted net profit margin 6.40% 6.13% 3.02% 5.11% 4.77% 4.20%
Total Asset Turnover
Reported total asset turnover 1.92 1.83 2.07 1.94 1.89 1.89
Adjusted total asset turnover 1.93 1.84 2.08 1.95 1.90 1.90
Financial Leverage
Reported financial leverage 32.52 20.02 9.47 6.01 5.35 4.08
Adjusted financial leverage 42.29 22.35 10.21 6.13 5.48 4.19
Return on Equity (ROE)
Reported ROE 406.05% 217.09% 63.50% 58.69% 48.07% 33.26%
Adjusted ROE 522.88% 251.71% 64.39% 61.10% 49.76% 33.50%
Return on Assets (ROA)
Reported ROA 12.49% 10.85% 6.71% 9.77% 8.99% 8.14%
Adjusted ROA 12.36% 11.26% 6.30% 9.97% 9.07% 8.00%

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Lowe’s Cos. Inc.’s adjusted net profit margin ratio improved from 2019 to 2020 and from 2020 to 2021.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lowe’s Cos. Inc.’s adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Lowe’s Cos. Inc.’s adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Lowe’s Cos. Inc.’s adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Lowe’s Cos. Inc.’s adjusted ROA improved from 2019 to 2020 and from 2020 to 2021.

Lowe’s Cos. Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings 5,835  4,281  2,314  3,447  3,093  2,546 
Net sales 89,597  72,148  71,309  68,619  65,017  59,074 
Profitability Ratio
Net profit margin1 6.51% 5.93% 3.25% 5.02% 4.76% 4.31%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 5,736  4,420  2,157  3,503  3,102  2,483 
Net sales 89,597  72,148  71,309  68,619  65,017  59,074 
Profitability Ratio
Adjusted net profit margin2 6.40% 6.13% 3.02% 5.11% 4.77% 4.20%

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

2021 Calculations

1 Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × 5,835 ÷ 89,597 = 6.51%

2 Adjusted net profit margin = 100 × Adjusted net earnings ÷ Net sales
= 100 × 5,736 ÷ 89,597 = 6.40%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Lowe’s Cos. Inc.’s adjusted net profit margin ratio improved from 2019 to 2020 and from 2020 to 2021.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net sales 89,597  72,148  71,309  68,619  65,017  59,074 
Total assets 46,735  39,471  34,508  35,291  34,408  31,266 
Activity Ratio
Total asset turnover1 1.92 1.83 2.07 1.94 1.89 1.89
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 89,597  72,148  71,309  68,619  65,017  59,074 
Adjusted total assets 46,395  39,255  34,214  35,123  34,186  31,025 
Activity Ratio
Adjusted total asset turnover2 1.93 1.84 2.08 1.95 1.90 1.90

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

2021 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 89,597 ÷ 46,735 = 1.92

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 89,597 ÷ 46,395 = 1.93

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lowe’s Cos. Inc.’s adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 46,735  39,471  34,508  35,291  34,408  31,266 
Shareholders’ equity 1,437  1,972  3,644  5,873  6,434  7,654 
Solvency Ratio
Financial leverage1 32.52 20.02 9.47 6.01 5.35 4.08
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 46,395  39,255  34,214  35,123  34,186  31,025 
Adjusted shareholders’ equity 1,097  1,756  3,350  5,733  6,234  7,413 
Solvency Ratio
Adjusted financial leverage2 42.29 22.35 10.21 6.13 5.48 4.19

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

2021 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 46,735 ÷ 1,437 = 32.52

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 46,395 ÷ 1,097 = 42.29

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Lowe’s Cos. Inc.’s adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings 5,835  4,281  2,314  3,447  3,093  2,546 
Shareholders’ equity 1,437  1,972  3,644  5,873  6,434  7,654 
Profitability Ratio
ROE1 406.05% 217.09% 63.50% 58.69% 48.07% 33.26%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 5,736  4,420  2,157  3,503  3,102  2,483 
Adjusted shareholders’ equity 1,097  1,756  3,350  5,733  6,234  7,413 
Profitability Ratio
Adjusted ROE2 522.88% 251.71% 64.39% 61.10% 49.76% 33.50%

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

2021 Calculations

1 ROE = 100 × Net earnings ÷ Shareholders’ equity
= 100 × 5,835 ÷ 1,437 = 406.05%

2 Adjusted ROE = 100 × Adjusted net earnings ÷ Adjusted shareholders’ equity
= 100 × 5,736 ÷ 1,097 = 522.88%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Lowe’s Cos. Inc.’s adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net earnings 5,835  4,281  2,314  3,447  3,093  2,546 
Total assets 46,735  39,471  34,508  35,291  34,408  31,266 
Profitability Ratio
ROA1 12.49% 10.85% 6.71% 9.77% 8.99% 8.14%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 5,736  4,420  2,157  3,503  3,102  2,483 
Adjusted total assets 46,395  39,255  34,214  35,123  34,186  31,025 
Profitability Ratio
Adjusted ROA2 12.36% 11.26% 6.30% 9.97% 9.07% 8.00%

Based on: 10-K (filing date: 2021-03-22), 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29).

2021 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 5,835 ÷ 46,735 = 12.49%

2 Adjusted ROA = 100 × Adjusted net earnings ÷ Adjusted total assets
= 100 × 5,736 ÷ 46,395 = 12.36%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Lowe’s Cos. Inc.’s adjusted ROA improved from 2019 to 2020 and from 2020 to 2021.