Stock Analysis on Net

Lowe’s Cos. Inc. (NYSE:LOW)

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Economic Value Added (EVA)

Microsoft Excel

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Economic Profit

Lowe’s Cos. Inc., economic profit calculation

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
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Lowe’s Cos. Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Net Operating Profit after Taxes (NOPAT)

Lowe’s Cos. Inc., NOPAT calculation

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
Net earnings
Deferred income tax expense (benefit)1
Increase (decrease) in deferred revenue2
Increase (decrease) in accrual for exit activities3
Increase (decrease) in equity equivalents4
Interest expense, net of amount capitalized
Interest expense, operating lease liability5
Adjusted interest expense, net of amount capitalized
Tax benefit of interest expense, net of amount capitalized6
Adjusted interest expense, net of amount capitalized, after taxes7
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income8
Investment income, after taxes9
Net operating profit after taxes (NOPAT)

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in deferred revenue.

3 Addition of increase (decrease) in accrual for exit activities.

4 Addition of increase (decrease) in equity equivalents to net earnings.

5 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2022 Calculation
Tax benefit of interest expense, net of amount capitalized = Adjusted interest expense, net of amount capitalized × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net earnings.

8 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

9 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Lowe’s Cos. Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Cash Operating Taxes

Lowe’s Cos. Inc., cash operating taxes calculation

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
Income tax provision
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense, net of amount capitalized
Less: Tax imposed on investment income
Cash operating taxes

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
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Lowe’s Cos. Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

Invested Capital

Lowe’s Cos. Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Short-term borrowings
Current maturities of long-term debt
Long-term debt, excluding current maturities
Operating lease liability1
Total reported debt & leases
Shareholders’ equity (deficit)
Net deferred tax (assets) liabilities2
Deferred revenue3
Accrual for exit activities4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Adjusted shareholders’ equity (deficit)
Construction in progress7
Investments8
Invested capital

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).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of deferred revenue.

4 Addition of accrual for exit activities.

5 Addition of equity equivalents to shareholders’ equity (deficit).

6 Removal of accumulated other comprehensive income.

7 Subtraction of construction in progress.

8 Subtraction of investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Lowe’s Cos. Inc. invested capital increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Cost of Capital

Lowe’s Cos. Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt, including finance lease obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-01-28).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt, including finance lease obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-01-29).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt, including finance lease obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-01-31).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt, including finance lease obligations3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2019-02-01).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt, including finance lease obligations3 ÷ = × × (1 – 33.70%) =
Operating lease liability4 ÷ = × × (1 – 33.70%) =
Total:

Based on: 10-K (reporting date: 2018-02-02).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt, including finance lease obligations3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (reporting date: 2017-02-03).

1 US$ in millions

2 Equity. See details »

3 Debt, including finance lease obligations. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Lowe’s Cos. Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc.
Booking Holdings Inc.
Dollar Tree Inc.
Home Depot Inc.
Target Corp.
Ulta Beauty Inc.

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Lowe’s Cos. Inc. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

Economic Profit Margin

Lowe’s Cos. Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019 Feb 2, 2018 Feb 3, 2017
Selected Financial Data (US$ in millions)
Economic profit1
 
Net sales
Add: Increase (decrease) in deferred revenue
Adjusted net sales
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc.
Booking Holdings Inc.
Dollar Tree Inc.
Home Depot Inc.
Target Corp.
Ulta Beauty Inc.

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).

1 Economic profit. See details »

2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Lowe’s Cos. Inc. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.