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 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
Federal 935  963  1,734  1,824  1,688  1,475 
State 268  274  252  275  248  221 
Current 1,203  1,237  1,986  2,099  1,936  1,696 
Federal 121  (102) 60  (59) (112)
State 18  (55) (4) (4) (6)
Deferred 139  (157) 56  (63) (118)
Income tax provision 1,342  1,080  2,042  2,108  1,873  1,578 

Based on: 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), 10-K (filing date: 2015-03-31).

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 2018 to 2019 and from 2019 to 2020.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Lowe’s Cos. Inc.’s deferred decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 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 decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Effective Income Tax Rate (EITR)

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

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Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
Statutory federal income tax rate 21.00% 21.00% 33.70% 35.00% 35.00% 35.00%
State income taxes, net of federal tax benefit 4.10% 4.80% 2.90% 3.60% 3.60% 3.30%
Valuation allowance 1.30% 0.00% -0.60% 2.00% 4.20% 0.00%
Goodwill impairment 0.00% 5.50% 0.00% 0.00% 0.00% 0.00%
Mexico impairment -1.40% 1.50% 0.00% 0.00% 0.00% 0.00%
Other, net -1.10% -1.00% 1.20% -0.10% -0.40% -1.40%
Effective tax rate 23.90% 31.80% 37.20% 40.50% 42.40% 36.90%

Based on: 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), 10-K (filing date: 2015-03-31).

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 2018 to 2019 and from 2019 to 2020.

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 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
Self-insurance 260  252  238  352  369  378 
Share-based payment expense 30  31  36  69  83  81 
Deferred rent —  58  66  78  91  88 
Operating lease liabilities 1,377  —  —  —  —  — 
Mexico impairment —  74  —  —  —  — 
Impairment of investment —  —  —  381  270  — 
Capital loss carryforwards 225  223  225  —  —  — 
Foreign currency translation —  —  —  —  107  62 
Net operating losses 273  239  213  174  159  152 
Other, net 131  119  124  175  156  131 
Deferred tax assets 2,296  996  902  1,229  1,235  892 
Valuation allowance (561) (569) (475) (578) (447) (170)
Net deferred tax assets 1,735  427  427  651  788  722 
Operating lease assets (1,198) —  —  —  —  — 
Property (293) (76) (264) (417) (507) (534)
Other, net (28) (57) (23) (34) (40) (55)
Deferred tax liabilities (1,519) (133) (287) (451) (547) (589)
Net deferred tax asset (liability) 216  294  140  200  241  133 

Based on: 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), 10-K (filing date: 2015-03-31).

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 2018 to 2019 and from 2019 to 2020.
Net deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.
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) increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 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 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
Current deferred tax assets —  —  —  —  —  230 
Noncurrent deferred tax assets 216  294  168  222  241  — 
Noncurrent deferred tax liabilities —  —  28  22  —  97 

Based on: 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), 10-K (filing date: 2015-03-31).

Item Description The company
Noncurrent 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 noncurrent deferred tax assets increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level.
Noncurrent 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 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
Adjustment to Current Assets
Current assets (as reported) 15,318  14,228  12,772  12,000  10,561  10,080 
Less: Current deferred tax assets, net —  —  —  —  —  230 
Current assets (adjusted) 15,318  14,228  12,772  12,000  10,561  9,850 
Adjustment to Total Assets
Total assets (as reported) 39,471  34,508  35,291  34,408  31,266  31,827 
Less: Current deferred tax assets, net —  —  —  —  —  230 
Less: Noncurrent deferred tax assets, net 216  294  168  222  241  — 
Total assets (adjusted) 39,255  34,214  35,123  34,186  31,025  31,597 
Adjustment to Total Liabilities
Total liabilities (as reported) 37,499  30,864  29,418  27,974  23,612  21,859 
Less: Noncurrent deferred tax liabilities, net —  —  28  22  —  97 
Total liabilities (adjusted) 37,499  30,864  29,390  27,952  23,612  21,762 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 1,972  3,644  5,873  6,434  7,654  9,968 
Less: Net deferred tax assets (liabilities) 216  294  140  200  241  133 
Shareholders’ equity (adjusted) 1,756  3,350  5,733  6,234  7,413  9,835 
Adjustment to Net Earnings
Net earnings (as reported) 4,281  2,314  3,447  3,093  2,546  2,698 
Add: Deferred income tax expense (benefit) 139  (157) 56  (63) (118)
Net earnings (adjusted) 4,420  2,157  3,503  3,102  2,483  2,580 

Based on: 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), 10-K (filing date: 2015-03-31).


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 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
Current Ratio
Reported current ratio 1.01 0.98 1.06 1.00 1.01 1.08
Adjusted current ratio 1.01 0.98 1.06 1.00 1.01 1.05
Net Profit Margin
Reported net profit margin 5.93% 3.25% 5.02% 4.76% 4.31% 4.80%
Adjusted net profit margin 6.13% 3.02% 5.11% 4.77% 4.20% 4.59%
Total Asset Turnover
Reported total asset turnover 1.83 2.07 1.94 1.89 1.89 1.77
Adjusted total asset turnover 1.84 2.08 1.95 1.90 1.90 1.78
Financial Leverage
Reported financial leverage 20.02 9.47 6.01 5.35 4.08 3.19
Adjusted financial leverage 22.35 10.21 6.13 5.48 4.19 3.21
Return on Equity (ROE)
Reported ROE 217.09% 63.50% 58.69% 48.07% 33.26% 27.07%
Adjusted ROE 251.71% 64.39% 61.10% 49.76% 33.50% 26.23%
Return on Assets (ROA)
Reported ROA 10.85% 6.71% 9.77% 8.99% 8.14% 8.48%
Adjusted ROA 11.26% 6.30% 9.97% 9.07% 8.00% 8.17%

Based on: 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), 10-K (filing date: 2015-03-31).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Lowe’s Cos. Inc.’s adjusted current ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.
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 deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.
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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
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 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Lowe’s Cos. Inc.’s adjusted ROE improved from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Lowe’s Cos. Inc.’s adjusted ROA deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

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


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Current assets 15,318  14,228  12,772  12,000  10,561  10,080 
Current liabilities 15,182  14,497  12,096  11,974  10,492  9,348 
Liquidity Ratio
Current ratio1 1.01 0.98 1.06 1.00 1.01 1.08
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets 15,318  14,228  12,772  12,000  10,561  9,850 
Current liabilities 15,182  14,497  12,096  11,974  10,492  9,348 
Liquidity Ratio
Adjusted current ratio2 1.01 0.98 1.06 1.00 1.01 1.05

Based on: 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), 10-K (filing date: 2015-03-31).

2020 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 15,318 ÷ 15,182 = 1.01

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 15,318 ÷ 15,182 = 1.01

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Lowe’s Cos. Inc.’s adjusted current ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Adjusted Net Profit Margin

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Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings 4,281  2,314  3,447  3,093  2,546  2,698 
Net sales 72,148  71,309  68,619  65,017  59,074  56,223 
Profitability Ratio
Net profit margin1 5.93% 3.25% 5.02% 4.76% 4.31% 4.80%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 4,420  2,157  3,503  3,102  2,483  2,580 
Net sales 72,148  71,309  68,619  65,017  59,074  56,223 
Profitability Ratio
Adjusted net profit margin2 6.13% 3.02% 5.11% 4.77% 4.20% 4.59%

Based on: 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), 10-K (filing date: 2015-03-31).

2020 Calculations

1 Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × 4,281 ÷ 72,148 = 5.93%

2 Adjusted net profit margin = 100 × Adjusted net earnings ÷ Net sales
= 100 × 4,420 ÷ 72,148 = 6.13%

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 deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 72,148  71,309  68,619  65,017  59,074  56,223 
Total assets 39,471  34,508  35,291  34,408  31,266  31,827 
Activity Ratio
Total asset turnover1 1.83 2.07 1.94 1.89 1.89 1.77
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 72,148  71,309  68,619  65,017  59,074  56,223 
Adjusted total assets 39,255  34,214  35,123  34,186  31,025  31,597 
Activity Ratio
Adjusted total asset turnover2 1.84 2.08 1.95 1.90 1.90 1.78

Based on: 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), 10-K (filing date: 2015-03-31).

2020 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 72,148 ÷ 39,471 = 1.83

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 72,148 ÷ 39,255 = 1.84

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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 39,471  34,508  35,291  34,408  31,266  31,827 
Shareholders’ equity 1,972  3,644  5,873  6,434  7,654  9,968 
Solvency Ratio
Financial leverage1 20.02 9.47 6.01 5.35 4.08 3.19
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 39,255  34,214  35,123  34,186  31,025  31,597 
Adjusted shareholders’ equity 1,756  3,350  5,733  6,234  7,413  9,835 
Solvency Ratio
Adjusted financial leverage2 22.35 10.21 6.13 5.48 4.19 3.21

Based on: 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), 10-K (filing date: 2015-03-31).

2020 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 39,471 ÷ 1,972 = 20.02

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 39,255 ÷ 1,756 = 22.35

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 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings 4,281  2,314  3,447  3,093  2,546  2,698 
Shareholders’ equity 1,972  3,644  5,873  6,434  7,654  9,968 
Profitability Ratio
ROE1 217.09% 63.50% 58.69% 48.07% 33.26% 27.07%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 4,420  2,157  3,503  3,102  2,483  2,580 
Adjusted shareholders’ equity 1,756  3,350  5,733  6,234  7,413  9,835 
Profitability Ratio
Adjusted ROE2 251.71% 64.39% 61.10% 49.76% 33.50% 26.23%

Based on: 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), 10-K (filing date: 2015-03-31).

2020 Calculations

1 ROE = 100 × Net earnings ÷ Shareholders’ equity
= 100 × 4,281 ÷ 1,972 = 217.09%

2 Adjusted ROE = 100 × Adjusted net earnings ÷ Adjusted shareholders’ equity
= 100 × 4,420 ÷ 1,756 = 251.71%

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 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017 Jan 29, 2016 Jan 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings 4,281  2,314  3,447  3,093  2,546  2,698 
Total assets 39,471  34,508  35,291  34,408  31,266  31,827 
Profitability Ratio
ROA1 10.85% 6.71% 9.77% 8.99% 8.14% 8.48%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings 4,420  2,157  3,503  3,102  2,483  2,580 
Adjusted total assets 39,255  34,214  35,123  34,186  31,025  31,597 
Profitability Ratio
Adjusted ROA2 11.26% 6.30% 9.97% 9.07% 8.00% 8.17%

Based on: 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), 10-K (filing date: 2015-03-31).

2020 Calculations

1 ROA = 100 × Net earnings ÷ Total assets
= 100 × 4,281 ÷ 39,471 = 10.85%

2 Adjusted ROA = 100 × Adjusted net earnings ÷ Adjusted total assets
= 100 × 4,420 ÷ 39,255 = 11.26%

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 deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.