Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Lowe’s Cos. Inc., FCFF calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
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The financial data reveals notable fluctuations in the cash flow metrics over the periods analyzed. Both the net cash provided by operating activities and the free cash flow to the firm (FCFF) demonstrate variable trends that suggest shifts in operational efficiency and capital expenditure management.
- Net Cash Provided by Operating Activities
- This metric rises significantly from approximately 4.3 billion USD in early 2020 to a peak of roughly 11.0 billion USD in early 2021, indicating a strong increase in operational cash inflow during this period. However, a slight decline is observed in the subsequent years, falling to about 8.6 billion USD by early 2023 and further to around 8.1 billion USD by early 2024. The figure recovers somewhat in early 2025, reaching approximately 9.6 billion USD. This pattern suggests an initial surge in operating cash generation followed by a period of contraction and partial recovery.
- Free Cash Flow to the Firm (FCFF)
- Similar to the operating cash flow, FCFF shows a significant increase from about 3.3 billion USD in early 2020 to nearly 9.9 billion USD in early 2021. Thereafter, the free cash flow experiences a decline over the next two years, reducing to roughly 7.3 billion USD by early 2024. By early 2025, FCFF again exhibits an increase to approximately 8.8 billion USD. The trend follows a comparable pattern to operating cash flow but consistently remains lower, reflecting capital expenditures or other investments affecting free cash flow reserves.
Overall, the data suggests that the company experienced strong operating cash generation in early 2021, which was not fully sustained in subsequent years. The declines in both net operating cash flow and FCFF from 2021 through 2024 could indicate increased operational costs, capital investments, or potential market challenges. The uptick observed in early 2025 highlights a possible recovery phase or improved operational effectiveness moving forward.
Interest Paid, Net of Tax
Lowe’s Cos. Inc., interest paid, net of tax calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-01-31).
2 2025 Calculation
Cash paid for interest, net of amount capitalized, tax = Cash paid for interest, net of amount capitalized × EITR
= 1,475 × 24.00% = 354
3 2025 Calculation
Interest capitalized, tax = Interest capitalized × EITR
= 6 × 24.00% = 1
The analysis of the financial data over the six-year period reveals several notable trends. The effective income tax rate (EITR) demonstrates moderate fluctuations, starting at 23.9% in early 2020, slightly increasing to around 24.6%-24.7% in the following two years, peaking at 28.8% in early 2023, and then declining back to approximately 24% by early 2025. This pattern indicates a temporary rise in tax burden in 2023, followed by normalization in subsequent years.
Regarding interest expenses, the cash paid for interest, net of capitalized amounts and taxes, shows a consistent upward trajectory throughout the period. Beginning at $511 million in early 2020, this figure rises steadily each year, reaching $1.121 billion by early 2025. This substantial increase suggests growing debt servicing costs or increased borrowing over time, which may impact the company's financial leverage and interest coverage ratios.
The capitalized interest, net of tax, remains relatively low but exhibits a slight upward trend. Starting at $1 million in early 2020, capitalized interest fluctuates minimally, with some missing data in 2021, then gradually increasing to $5 million by early 2025. Although small compared to cash interest paid, this indicates a marginal increase in interest costs being capitalized as part of asset costs instead of being recognized as expense immediately.
- Effective Income Tax Rate (EITR)
- Moderate variability with a peak in 2023 and return to prior levels by 2025.
- Cash Paid for Interest, Net
- Consistent and substantial increase from $511 million to over $1.1 billion, indicating rising interest burdens.
- Interest Capitalized, Net
- Minor but steady rise from $1 million to $5 million, suggesting slight growth in capitalized interest expenses.
In summary, the data reflects an increasing financial cost related to interest payments, alongside a temporarily elevated tax rate in 2023. These trends may warrant further analysis concerning debt management strategies and their impact on the company's profitability and cash flow in coming periods.
Enterprise Value to FCFF Ratio, Current
Lowe’s Cos. Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in millions) | |
| Enterprise value (EV) | 161,083) |
| Free cash flow to the firm (FCFF) | 8,824) |
| Valuation Ratio | |
| EV/FCFF | 18.26 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Amazon.com Inc. | 59.04 |
| Home Depot Inc. | 23.83 |
| TJX Cos. Inc. | 31.97 |
| EV/FCFF, Sector | |
| Consumer Discretionary Distribution & Retail | 43.26 |
| EV/FCFF, Industry | |
| Consumer Discretionary | 39.16 |
Based on: 10-K (reporting date: 2025-01-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Lowe’s Cos. Inc., historical EV/FCFF calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Enterprise value (EV)1 | 163,704) | 180,028) | 145,852) | 173,894) | 147,046) | 69,616) | |
| Free cash flow to the firm (FCFF)2 | 8,824) | 7,290) | 7,458) | 8,893) | 9,879) | 3,323) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 18.55 | 24.69 | 19.56 | 19.56 | 14.88 | 20.95 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Amazon.com Inc. | — | 60.78 | 45.92 | — | — | 78.83 | |
| Home Depot Inc. | 22.58 | 21.94 | 27.17 | 25.12 | 20.22 | 19.11 | |
| TJX Cos. Inc. | 32.22 | 24.44 | 31.93 | 33.03 | 18.30 | 19.08 | |
| EV/FCFF, Sector | |||||||
| Consumer Discretionary Distribution & Retail | — | 44.15 | 38.32 | 111.04 | 130.00 | 51.35 | |
| EV/FCFF, Industry | |||||||
| Consumer Discretionary | — | 41.92 | 33.08 | 50.80 | 60.24 | 46.23 | |
Based on: 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), 10-K (reporting date: 2020-01-31).
3 2025 Calculation
EV/FCFF = EV ÷ FCFF
= 163,704 ÷ 8,824 = 18.55
4 Click competitor name to see calculations.
The financial data over the six-year span reveals several key trends and fluctuations in the enterprise value (EV), free cash flow to the firm (FCFF), and the EV to FCFF ratio.
- Enterprise Value (EV)
- The enterprise value shows an overall increasing pattern from 69,616 million US dollars in early 2020 to a peak of 180,028 million US dollars in early 2024. Notably, there was a significant jump between 2020 and 2021, more than doubling the EV. Following the peak in 2024, EV declined to 163,704 million US dollars in 2025, indicating some volatility or market adjustments during this latter period.
- Free Cash Flow to the Firm (FCFF)
- The FCFF experienced a dramatic rise from 3,323 million US dollars in 2020 to 9,879 million US dollars in 2021, representing nearly a threefold increase. After 2021, the FCFF declined gradually to a low point of 7,290 million US dollars in 2024 before rebounding to 8,824 million US dollars in 2025. This pattern indicates variability in operational cash generation, with a peak early in the period and some recovery after several years of decline.
- EV/FCFF Ratio
- The EV to FCFF ratio decreased significantly from 20.95 in 2020 to 14.88 in 2021, reaching its lowest point during the observed period. However, it subsequently increased, reaching a high of 24.69 in 2024, the highest ratio observed. By 2025, the ratio fell back to 18.55, which, although lower than the peak, remained higher than the initial levels at the beginning of the period. This ratio trend suggests fluctuating valuation multiples relative to free cash flow, with valuation becoming more expensive relative to cash flow by 2024 before moderating somewhat in 2025.
In summarizing, the data indicate a period of rapid growth in enterprise value and free cash flow through 2021, followed by some moderation and volatility in both metrics over the subsequent years. The EV/FCFF ratio’s fluctuations reflect changing market perceptions of value relative to cash flow generation, with the ratio peaking in 2024, signaling a potentially higher valuation premium during that year. The recovery in FCFF in 2025 combined with a reduction in the valuation multiple may suggest a stabilization phase or a reassessment of growth prospects.