Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Lowe’s Cos. Inc., profitability ratios
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
The profitability metrics demonstrate fluctuating performance over the observed period. Gross profit margin exhibits relative stability, while operating and net profit margins show more pronounced variations. Asset and equity returns also display shifts, indicating changes in how efficiently the company utilizes its resources to generate profit.
- Gross Profit Margin
- The gross profit margin remained consistently within a narrow range, fluctuating between 33.01% and 33.48% throughout the period. This suggests a stable cost of goods sold relative to revenue. A slight upward trend is discernible towards the later years, indicating potential improvements in production efficiency or pricing strategies.
- Operating Profit Margin
- The operating profit margin experienced more volatility. It increased significantly from 10.77% in 2021 to 12.56% in 2022, then decreased to 10.47% in 2023. A substantial increase to 13.38% was observed in 2024, followed by a decrease to 12.51% in 2025 and a further decline to 11.77% in 2026. This suggests that operating expenses, relative to revenue, have varied considerably over time.
- Net Profit Margin
- Similar to the operating profit margin, the net profit margin also showed fluctuations. It rose from 6.51% in 2021 to 8.77% in 2022, decreased to 6.63% in 2023, and then increased to 8.94% in 2024. A subsequent decline to 8.31% in 2025 and 7.71% in 2026 indicates potential impacts from factors such as interest expense or taxes. The trend generally mirrors the operating profit margin, but with a smaller magnitude of change.
- Return on Equity (ROE)
- The return on equity was only reported for 2021, registering a very high value of 406.05%. The absence of subsequent ROE figures prevents any trend analysis. This single value, while high, is insufficient for drawing conclusions about the company’s profitability relative to shareholder equity over time.
- Return on Assets (ROA)
- The return on assets increased from 12.49% in 2021 to 18.91% in 2022, then decreased to 14.73% in 2023. It rose again to 18.49% in 2024, followed by a decrease to 16.14% in 2025 and a further decline to 12.29% in 2026. This pattern suggests a cyclical relationship between asset utilization and profitability. The ROA generally tracks the operating and net profit margins, indicating that changes in profitability are reflected in the efficiency with which assets are employed.
Overall, the company demonstrates a capacity for profitability, but its performance is subject to variability. The stability of the gross profit margin contrasts with the fluctuations observed in operating and net profit margins, suggesting that changes in operating expenses and other non-operating items significantly influence overall profitability. The declining trend in ROA towards the end of the period warrants further investigation.
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Return on Sales
Return on Investment
Gross Profit Margin
Lowe’s Cos. Inc., gross profit margin calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Gross margin | 28,885) | 27,877) | 28,844) | 32,257) | 32,056) | 29,572) | |
| Net sales | 86,286) | 83,674) | 86,377) | 97,059) | 96,250) | 89,597) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 33.48% | 33.32% | 33.39% | 33.23% | 33.30% | 33.01% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | — | 50.29% | 48.85% | 46.98% | 43.81% | 42.03% | |
| Home Depot Inc. | 33.32% | 33.42% | 33.38% | 33.53% | 33.63% | 33.95% | |
| TJX Cos. Inc. | 30.96% | 30.60% | 30.00% | 27.61% | 28.50% | 23.66% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 2026 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 28,885 ÷ 86,286 = 33.48%
2 Click competitor name to see calculations.
The gross profit margin exhibited relative stability over the analyzed period, generally fluctuating within a narrow range. While gross margin in US dollar terms demonstrated an initial increase followed by a decline, the gross profit margin expressed as a percentage remained consistently above 33%.
- Gross Profit Margin Trend
- The gross profit margin began at 33.01% in January 2021 and increased to 33.30% in January 2022. It remained relatively stable at 33.23% in February 2023 before reaching 33.39% in February 2024. A slight decrease to 33.32% was observed in January 2025, followed by a marginal increase to 33.48% in January 2026.
- Gross Margin (US$ in Millions) Trend
- Gross margin in US dollar terms increased from $29,572 million in January 2021 to $32,056 million in January 2022, and further to $32,257 million in February 2023. A decrease was then noted, with gross margin falling to $28,844 million in February 2024. This downward trend continued to $27,877 million in January 2025, before a partial recovery to $28,885 million in January 2026.
- Relationship between Net Sales and Gross Margin
- Net sales increased from $89,597 million in January 2021 to $96,250 million in January 2022 and peaked at $97,059 million in February 2023. A subsequent decline in net sales to $86,377 million in February 2024 coincided with the decrease in gross margin (US$ in millions). While net sales continued to decrease to $83,674 million in January 2025, the gross margin decline was less pronounced. Net sales showed a slight increase to $86,286 million in January 2026, aligning with the modest increase in gross margin.
Despite fluctuations in both net sales and gross margin (US$ in millions), the gross profit margin percentage remained remarkably consistent, suggesting effective cost management or pricing strategies were employed to maintain profitability levels.
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Operating Profit Margin
Lowe’s Cos. Inc., operating profit margin calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Operating income | 10,153) | 10,466) | 11,557) | 10,159) | 12,093) | 9,647) | |
| Net sales | 86,286) | 83,674) | 86,377) | 97,059) | 96,250) | 89,597) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 11.77% | 12.51% | 13.38% | 10.47% | 12.56% | 10.77% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | — | 11.16% | 10.75% | 6.41% | 2.38% | 5.30% | |
| Home Depot Inc. | 12.68% | 13.49% | 14.21% | 15.27% | 15.24% | 13.84% | |
| TJX Cos. Inc. | 11.89% | 11.18% | 10.69% | 9.73% | 9.79% | 1.81% | |
| Operating Profit Margin, Sector | |||||||
| Consumer Discretionary Distribution & Retail | — | 11.64% | 11.56% | 8.63% | 6.44% | 7.38% | |
| Operating Profit Margin, Industry | |||||||
| Consumer Discretionary | — | 9.27% | 10.96% | 9.02% | 8.35% | 8.71% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 2026 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 10,153 ÷ 86,286 = 11.77%
2 Click competitor name to see calculations.
The operating profit margin exhibited fluctuations over the analyzed period. Initially, an increasing trend was observed, followed by a period of decline and subsequent stabilization. A detailed examination of the figures reveals specific patterns in the company’s operational profitability.
- Overall Trend
- The operating profit margin increased from 10.77% in January 2021 to a peak of 13.38% in February 2024. Following this peak, the margin experienced a slight decrease to 12.51% in January 2025 and further to 11.77% in January 2026. This suggests a period of strong operational performance followed by a moderation in profitability.
- Initial Growth Phase (2021-2024)
- Between January 2021 and February 2024, the operating profit margin demonstrated consistent growth. This growth coincided with an increase in net sales, although the rate of sales increase varied. The most significant increase in operating profit margin occurred between January 2022 and February 2024, indicating improved operational efficiency or pricing power during this timeframe.
- Recent Performance (2024-2026)
- From February 2024 to January 2026, the operating profit margin decreased. While net sales experienced a decline in January 2025, they partially recovered in January 2026, the operating profit margin continued to decrease. This suggests that factors beyond sales volume, such as increased operating costs or pricing pressures, may have contributed to the decline in profitability.
- Relationship to Operating Income and Net Sales
- The operating profit margin is directly influenced by the relationship between operating income and net sales. While operating income generally remained relatively stable between January 2021 and January 2026, fluctuations in net sales significantly impacted the margin. The peak margin in February 2024 was achieved despite a decrease in net sales compared to the prior year, suggesting substantial improvements in cost control or pricing strategies.
In conclusion, the operating profit margin demonstrates a dynamic pattern of growth, peak performance, and subsequent moderation. Further investigation into the underlying drivers of these changes, including cost structures and pricing strategies, would be beneficial for a more comprehensive understanding of the company’s operational profitability.
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Net Profit Margin
Lowe’s Cos. Inc., net profit margin calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | 6,654) | 6,957) | 7,726) | 6,437) | 8,442) | 5,835) | |
| Net sales | 86,286) | 83,674) | 86,377) | 97,059) | 96,250) | 89,597) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 7.71% | 8.31% | 8.94% | 6.63% | 8.77% | 6.51% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | — | 10.83% | 9.29% | 5.29% | -0.53% | 7.10% | |
| Home Depot Inc. | 8.60% | 9.28% | 9.92% | 10.87% | 10.87% | 9.74% | |
| TJX Cos. Inc. | 9.10% | 8.63% | 8.25% | 7.00% | 6.76% | 0.28% | |
| Net Profit Margin, Sector | |||||||
| Consumer Discretionary Distribution & Retail | — | 10.26% | 9.30% | 6.54% | 3.14% | 7.21% | |
| Net Profit Margin, Industry | |||||||
| Consumer Discretionary | — | 7.84% | 8.69% | 7.84% | 5.02% | 9.12% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 2026 Calculation
Net profit margin = 100 × Net earnings ÷ Net sales
= 100 × 6,654 ÷ 86,286 = 7.71%
2 Click competitor name to see calculations.
The net profit margin exhibited considerable fluctuation over the observed period. Initial values demonstrated growth, followed by a period of decline and subsequent stabilization. A detailed examination of the trends is presented below.
- Overall Trend
- The net profit margin began at 6.51% in January 2021 and increased substantially to 8.77% in January 2022. Following this peak, the margin decreased to 6.63% in February 2023, before rising again to 8.94% in February 2024. The most recent two years show a decreasing trend, with the margin settling at 8.31% in January 2025 and further declining to 7.71% in January 2026.
- Growth Phase (2021-2022)
- The period between January 2021 and January 2022 witnessed a significant improvement in net profit margin. This increase coincided with a rise in net earnings from US$5,835 million to US$8,442 million, while net sales also increased from US$89,597 million to US$96,250 million. The substantial growth suggests improved operational efficiency or pricing strategies during this timeframe.
- Volatility and Recent Decline (2023-2026)
- From February 2023 onwards, the net profit margin experienced increased volatility. While a peak was reached in February 2024, the subsequent two years indicate a downward trend. Net sales remained relatively stable between February 2023 and January 2026, fluctuating between US$83,674 million and US$97,059 million. However, net earnings decreased from US$6,437 million in February 2023 to US$6,654 million in January 2026, suggesting that increasing costs or pricing pressures may be impacting profitability despite relatively consistent sales.
- Peak Performance
- February 2024 represents the highest net profit margin observed during the analyzed period, reaching 8.94%. This was achieved on net sales of US$86,377 million and net earnings of US$7,726 million. This period likely reflects optimal cost management and strong sales performance.
In conclusion, the net profit margin demonstrates a pattern of initial growth, followed by volatility and a recent decline. Further investigation into the factors influencing net earnings and net sales is recommended to understand the drivers behind these trends and inform future strategic decisions.
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Return on Equity (ROE)
Lowe’s Cos. Inc., ROE calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | 6,654) | 6,957) | 7,726) | 6,437) | 8,442) | 5,835) | |
| Shareholders’ equity (deficit) | (9,917) | (14,231) | (15,050) | (14,254) | (4,816) | 1,437) | |
| Profitability Ratio | |||||||
| ROE1 | — | — | — | — | — | 406.05% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Amazon.com Inc. | — | 18.89% | 20.72% | 15.07% | -1.86% | 24.13% | |
| Home Depot Inc. | 110.48% | 222.98% | 1,450.48% | 1,095.07% | — | 390.00% | |
| TJX Cos. Inc. | 53.92% | 57.95% | 61.27% | 54.97% | 54.69% | 1.55% | |
| ROE, Sector | |||||||
| Consumer Discretionary Distribution & Retail | — | 25.32% | 31.01% | 29.39% | 17.48% | 35.05% | |
| ROE, Industry | |||||||
| Consumer Discretionary | — | 20.91% | 27.93% | 29.93% | 20.78% | 33.71% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 2026 Calculation
ROE = 100 × Net earnings ÷ Shareholders’ equity (deficit)
= 100 × 6,654 ÷ -9,917 = —
2 Click competitor name to see calculations.
The period under review demonstrates significant volatility in shareholders’ equity, heavily influencing the reported return on equity. Net earnings exhibit fluctuations, while the calculation of ROE is only available for the period ending January 29, 2021.
- Net Earnings
- Net earnings increased substantially from US$5,835 million in 2021 to US$8,442 million in 2022. A subsequent decline to US$6,437 million was observed in 2023, followed by a recovery to US$7,726 million in 2024. Further decreases are noted in 2025 and 2026, with net earnings reaching US$6,957 million and US$6,654 million respectively.
- Shareholders’ Equity
- Shareholders’ equity experienced a dramatic shift from a positive value of US$1,437 million in 2021 to a negative value of US$-4,816 million in 2022. This negative trend continued, with equity reaching US$-14,254 million in 2023 and US$-15,050 million in 2024. A slight improvement is seen in 2025 (US$-14,231 million), followed by a further recovery to US$-9,917 million in 2026, though remaining in negative territory.
- Return on Equity (ROE)
- The return on equity was reported as 406.05% in 2021. No ROE values are available for the subsequent years (2022-2026). The exceptionally high ROE in 2021 is likely a result of the comparatively small shareholders’ equity base combined with substantial net earnings. The absence of ROE figures for later periods prevents assessment of any trend and is directly attributable to the negative shareholders’ equity values during those years, rendering the standard ROE calculation meaningless.
The substantial changes in shareholders’ equity warrant further investigation to understand the underlying causes, such as share repurchases, dividend payouts, or accumulated losses. The lack of ROE calculations beyond 2021 limits the ability to assess the company’s profitability relative to equity over the entire period.
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Return on Assets (ROA)
Lowe’s Cos. Inc., ROA calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings | 6,654) | 6,957) | 7,726) | 6,437) | 8,442) | 5,835) | |
| Total assets | 54,144) | 43,102) | 41,795) | 43,708) | 44,640) | 46,735) | |
| Profitability Ratio | |||||||
| ROA1 | 12.29% | 16.14% | 18.49% | 14.73% | 18.91% | 12.49% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Amazon.com Inc. | — | 9.49% | 9.48% | 5.76% | -0.59% | 7.93% | |
| Home Depot Inc. | 13.47% | 15.40% | 19.79% | 22.38% | 22.86% | 18.23% | |
| TJX Cos. Inc. | 15.36% | 15.32% | 15.04% | 12.34% | 11.53% | 0.29% | |
| ROA, Sector | |||||||
| Consumer Discretionary Distribution & Retail | — | 10.55% | 11.20% | 8.50% | 4.19% | 9.17% | |
| ROA, Industry | |||||||
| Consumer Discretionary | — | 6.71% | 8.12% | 7.57% | 4.81% | 7.99% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 2026 Calculation
ROA = 100 × Net earnings ÷ Total assets
= 100 × 6,654 ÷ 54,144 = 12.29%
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited considerable fluctuation over the observed period. Initially, a strong upward trend was present, followed by periods of decline and stabilization. Net earnings demonstrated an initial increase, peaking in 2022, before experiencing a decrease in 2023 and a subsequent recovery in 2024 and 2025, followed by a slight decline in 2026. Total assets generally decreased from 2021 to 2024, then increased significantly in 2026.
- ROA Trend (2021-2026)
- In 2021, the ROA stood at 12.49%. A substantial increase was observed in 2022, reaching 18.91%, representing the highest value within the analyzed timeframe. The ROA then decreased to 14.73% in 2023. A recovery occurred in 2024, with the ROA rising to 18.49%. The ROA experienced a further increase to 16.14% in 2025, before declining to 12.29% in 2026.
- Relationship between Net Earnings and ROA
- The initial increase in ROA from 2021 to 2022 aligns with the significant growth in net earnings during the same period. The subsequent decrease in ROA in 2023 corresponds with the decline in net earnings. The ROA’s recovery in 2024 and 2025 mirrors the increase in net earnings. However, the decline in ROA in 2026, despite a slight decrease in net earnings, suggests that the increase in total assets played a role in lowering the ratio.
- Impact of Total Assets
- Total assets decreased consistently from 2021 to 2024. This decrease, coupled with fluctuating net earnings, contributed to the observed ROA movements. The substantial increase in total assets in 2026, from 41,795 to 54,144 US$ millions, likely contributed to the decline in ROA, as the same level of net earnings was spread across a larger asset base.
Overall, the ROA demonstrates sensitivity to both net earnings and total asset levels. The significant increase in assets in the final year warrants further investigation to determine the nature of these assets and their potential contribution to future profitability.
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