Stock Analysis on Net

Lowe’s Cos. Inc. (NYSE:LOW)

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

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

US$ in millions

Microsoft Excel
12 months ended: Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Federal 2,069  1,578  935  963  1,734  1,824 
State 557  425  268  274  252  275 
Current 2,626  2,003  1,203  1,237  1,986  2,099 
Federal 129  (73) 121  (102) 60 
State 11  (26) 18  (55) (4)
Deferred 140  (99) 139  (157) 56 
Income tax provision 2,766  1,904  1,342  1,080  2,042  2,108 

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Lowe’s Cos. Inc. current increased from 2020 to 2021 and from 2021 to 2022.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Lowe’s Cos. Inc. deferred decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 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. income tax provision increased from 2020 to 2021 and from 2021 to 2022.

Effective Income Tax Rate (EITR)

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

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Statutory federal income tax rate 21.00% 21.00% 21.00% 21.00% 33.70% 35.00%
State income taxes, net of federal tax benefit 4.00% 4.00% 4.10% 4.80% 2.90% 3.60%
Valuation allowance 0.00% 0.00% 1.30% 0.00% -0.60% 2.00%
Goodwill impairment 0.00% 0.00% 0.00% 5.50% 0.00% 0.00%
Mexico impairment 0.00% 0.00% -1.40% 1.50% 0.00% 0.00%
Other, net -0.30% -0.40% -1.10% -1.00% 1.20% -0.10%
Effective tax rate 24.70% 24.60% 23.90% 31.80% 37.20% 40.50%

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

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. effective tax rate increased from 2020 to 2021 and from 2021 to 2022.

Components of Deferred Tax Assets and Liabilities

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

US$ in millions

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Self-insurance 287  284  260  252  238  352 
Share-based payment expense 53  48  30  31  36  69 
Deferred rent —  —  —  58  66  78 
Operating lease liabilities 1,386  1,328  1,377  —  —  — 
Mexico impairment —  —  —  74  —  — 
Impairment of investment —  —  —  —  —  381 
Capital loss carryforwards 225  225  225  223  225  — 
Net operating losses 251  274  273  239  213  174 
Other, net 242  337  131  119  124  175 
Deferred tax assets 2,444  2,496  2,296  996  902  1,229 
Valuation allowance (590) (601) (561) (569) (475) (578)
Net deferred tax assets 1,854  1,895  1,735  427  427  651 
Operating lease assets (1,378) (1,146) (1,198) —  —  — 
Property (267) (382) (293) (76) (264) (417)
Other, net (45) (27) (28) (57) (23) (34)
Deferred tax liabilities (1,690) (1,555) (1,519) (133) (287) (451)
Net deferred tax assets (liabilities) 164  340  216  294  140  200 

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

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. deferred tax assets increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.
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. net deferred tax assets increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.
Net deferred tax assets (liabilities) 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. net deferred tax assets (liabilities) increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Deferred Tax Assets and Liabilities, Classification

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

US$ in millions

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Deferred tax assets 164  340  216  294  168  222 
Deferred tax liabilities —  —  —  —  28  22 

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

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. deferred tax assets increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.
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

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Adjustment to Total Assets
Total assets (as reported) 44,640  46,735  39,471  34,508  35,291  34,408 
Less: Noncurrent deferred tax assets, net 164  340  216  294  168  222 
Total assets (adjusted) 44,476  46,395  39,255  34,214  35,123  34,186 
Adjustment to Total Liabilities
Total liabilities (as reported) 49,456  45,298  37,499  30,864  29,418  27,974 
Less: Noncurrent deferred tax liabilities, net —  —  —  —  28  22 
Total liabilities (adjusted) 49,456  45,298  37,499  30,864  29,390  27,952 
Adjustment to Shareholders’ Equity (deficit)
Shareholders’ equity (deficit) (as reported) (4,816) 1,437  1,972  3,644  5,873  6,434 
Less: Net deferred tax assets (liabilities) 164  340  216  294  140  200 
Shareholders’ equity (deficit) (adjusted) (4,980) 1,097  1,756  3,350  5,733  6,234 
Adjustment to Net Earnings
Net earnings (as reported) 8,442  5,835  4,281  2,314  3,447  3,093 
Add: Deferred income tax expense (benefit) 140  (99) 139  (157) 56 
Net earnings (adjusted) 8,582  5,736  4,420  2,157  3,503  3,102 

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).


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


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Lowe’s Cos. Inc., adjusted financial ratios

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Net Profit Margin
Reported net profit margin 8.77% 6.51% 5.93% 3.25% 5.02% 4.76%
Adjusted net profit margin 8.92% 6.40% 6.13% 3.02% 5.11% 4.77%
Total Asset Turnover
Reported total asset turnover 2.16 1.92 1.83 2.07 1.94 1.89
Adjusted total asset turnover 2.16 1.93 1.84 2.08 1.95 1.90
Financial Leverage
Reported financial leverage 32.52 20.02 9.47 6.01 5.35
Adjusted financial leverage 42.29 22.35 10.21 6.13 5.48
Return on Equity (ROE)
Reported ROE 406.05% 217.09% 63.50% 58.69% 48.07%
Adjusted ROE 522.88% 251.71% 64.39% 61.10% 49.76%
Return on Assets (ROA)
Reported ROA 18.91% 12.49% 10.85% 6.71% 9.77% 8.99%
Adjusted ROA 19.30% 12.36% 11.26% 6.30% 9.97% 9.07%

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

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. adjusted net profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Lowe’s Cos. Inc. adjusted total asset turnover ratio improved from 2020 to 2021 and from 2021 to 2022.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Lowe’s Cos. Inc. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.

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


Adjusted Net Profit Margin

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
As Reported
Selected Financial Data (US$ in millions)
Net earnings 8,442  5,835  4,281  2,314  3,447  3,093 
Net sales 96,250  89,597  72,148  71,309  68,619  65,017 
Profitability Ratio
Net profit margin1 8.77% 6.51% 5.93% 3.25% 5.02% 4.76%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 8,582  5,736  4,420  2,157  3,503  3,102 
Net sales 96,250  89,597  72,148  71,309  68,619  65,017 
Profitability Ratio
Adjusted net profit margin2 8.92% 6.40% 6.13% 3.02% 5.11% 4.77%

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

2022 Calculations

1 Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × 8,442 ÷ 96,250 = 8.77%

2 Adjusted net profit margin = 100 × Adjusted net earnings ÷ Net sales
= 100 × 8,582 ÷ 96,250 = 8.92%

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. adjusted net profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.

Adjusted Total Asset Turnover

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
As Reported
Selected Financial Data (US$ in millions)
Net sales 96,250  89,597  72,148  71,309  68,619  65,017 
Total assets 44,640  46,735  39,471  34,508  35,291  34,408 
Activity Ratio
Total asset turnover1 2.16 1.92 1.83 2.07 1.94 1.89
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 96,250  89,597  72,148  71,309  68,619  65,017 
Adjusted total assets 44,476  46,395  39,255  34,214  35,123  34,186 
Activity Ratio
Adjusted total asset turnover2 2.16 1.93 1.84 2.08 1.95 1.90

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

2022 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 96,250 ÷ 44,640 = 2.16

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 96,250 ÷ 44,476 = 2.16

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. adjusted total asset turnover ratio improved from 2020 to 2021 and from 2021 to 2022.

Adjusted Financial Leverage

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
As Reported
Selected Financial Data (US$ in millions)
Total assets 44,640  46,735  39,471  34,508  35,291  34,408 
Shareholders’ equity (deficit) (4,816) 1,437  1,972  3,644  5,873  6,434 
Solvency Ratio
Financial leverage1 32.52 20.02 9.47 6.01 5.35
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 44,476  46,395  39,255  34,214  35,123  34,186 
Adjusted shareholders’ equity (deficit) (4,980) 1,097  1,756  3,350  5,733  6,234 
Solvency Ratio
Adjusted financial leverage2 42.29 22.35 10.21 6.13 5.48

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

2022 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity (deficit)
= 44,640 ÷ -4,816 =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity (deficit)
= 44,476 ÷ -4,980 =


Adjusted Return on Equity (ROE)

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
As Reported
Selected Financial Data (US$ in millions)
Net earnings 8,442  5,835  4,281  2,314  3,447  3,093 
Shareholders’ equity (deficit) (4,816) 1,437  1,972  3,644  5,873  6,434 
Profitability Ratio
ROE1 406.05% 217.09% 63.50% 58.69% 48.07%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 8,582  5,736  4,420  2,157  3,503  3,102 
Adjusted shareholders’ equity (deficit) (4,980) 1,097  1,756  3,350  5,733  6,234 
Profitability Ratio
Adjusted ROE2 522.88% 251.71% 64.39% 61.10% 49.76%

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

2022 Calculations

1 ROE = 100 × Net earnings ÷ Shareholders’ equity (deficit)
= 100 × 8,442 ÷ -4,816 =

2 Adjusted ROE = 100 × Adjusted net earnings ÷ Adjusted shareholders’ equity (deficit)
= 100 × 8,582 ÷ -4,980 =


Adjusted Return on Assets (ROA)

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
As Reported
Selected Financial Data (US$ in millions)
Net earnings 8,442  5,835  4,281  2,314  3,447  3,093 
Total assets 44,640  46,735  39,471  34,508  35,291  34,408 
Profitability Ratio
ROA1 18.91% 12.49% 10.85% 6.71% 9.77% 8.99%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 8,582  5,736  4,420  2,157  3,503  3,102 
Adjusted total assets 44,476  46,395  39,255  34,214  35,123  34,186 
Profitability Ratio
Adjusted ROA2 19.30% 12.36% 11.26% 6.30% 9.97% 9.07%

Based on: 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01), 10-K (reporting date: 2018-02-02), 10-K (reporting date: 2017-02-03).

2022 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 8,442 ÷ 44,640 = 18.91%

2 Adjusted ROA = 100 × Adjusted net earnings ÷ Adjusted total assets
= 100 × 8,582 ÷ 44,476 = 19.30%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Lowe’s Cos. Inc. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.