DCF Studio

    LOW · NYQ · Consumer Cyclical

    Lowe's Companies, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 229.25

    Market price

    USD 218.15

    Implied upside

    +5.1%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-01-31

    Value Per Share

    Perpetuity growth
    USD 229.25+5.1%
    Exit multiple
    USD 237.44+8.8%
    Market price
    USD 218.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn5bn10bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 92.1bnUSD 94.4bnUSD 96.7bnUSD 99.0bnUSD 101.5bnUSD 104.0bnUSD 106.5bnUSD 109.2bnUSD 111.9bnUSD 114.7bn+2.5%
    EBITUSD 11.1bnUSD 11.4bnUSD 11.6bnUSD 11.9bnUSD 12.2bnUSD 12.5bnUSD 12.8bnUSD 13.1bnUSD 13.5bnUSD 13.8bn+2.5%
    NOPATUSD 8.8bnUSD 9.0bnUSD 9.2bnUSD 9.4bnUSD 9.6bnUSD 9.9bnUSD 10.1bnUSD 10.4bnUSD 10.6bnUSD 10.9bn+2.5%
    Add depreciation & amortisationUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.3bnUSD 2.4bnUSD 2.4bnUSD 2.5bnUSD 2.6bnUSD 2.6bn+2.5%
    Less capital expenditureUSD -2.1bnUSD -2.2bnUSD -2.3bnUSD -2.4bnUSD -2.6bnUSD -2.7bnUSD -2.9bnUSD -3.0bnUSD -3.2bnUSD -3.3bn+5.3%
    Capex, % of revenue2.3%2.3%2.4%2.5%2.5%2.6%2.7%2.7%2.8%2.9%-
    Less increase in working capitalUSD -579.0mUSD -221.6mUSD -227.9mUSD -234.3mUSD -240.9mUSD -247.7mUSD -254.7mUSD -262.0mUSD -269.4mUSD -277.2m-7.9%
    Free cashflow to firmUSD 8.2bnUSD 8.7bnUSD 8.9bnUSD 9.0bnUSD 9.2bnUSD 9.3bnUSD 9.5bnUSD 9.6bnUSD 9.8bnUSD 9.9bn+2.1%
    Discount factor0.96470.89790.83570.77780.72400.67380.62720.58370.54330.5057-
    Present valueUSD 7.9bnUSD 7.8bnUSD 7.4bnUSD 7.0bnUSD 6.6bnUSD 6.3bnUSD 5.9bnUSD 5.6bnUSD 5.3bnUSD 5.0bn-
    Present Value Of The ForecastUSD 64.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.873Reported 0.811, pulled toward 1.0 (Blume)
    Cost of equity8.59%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 6.6x interest cover. Book interest / average debt was lower, at 3.6%.
    Market capitalisationUSD 122.4bn73.3% of capital
    Total debtUSD 44.7bn26.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.44%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 229.25

    62% of EV

    Forecast FCFF, final year
    USD 9.9bn
    Capex at depreciation, working capital in reinvestment
    USD 10.9bn
    Less reinvestment at g/ROIC (6.3% of NOPAT)
    USD -684.5m
    Capitalised
    USD 10.2bn
    ROIC (reported)
    39.8%
    Terminal value, undiscounted
    USD 211.9bn
    Terminal value, discounted
    USD 107.1bn
    Enterprise value
    USD 172.1bn
    Less net debt
    USD 43.7bn
    Equity value
    USD 128.4bn

    Exit at 13.5x EBITDA

    Value per shareUSD 237.44

    63% of EV

    Terminal value, undiscounted
    USD 221.0bn
    Terminal value, discounted
    USD 111.7bn
    Enterprise value
    USD 176.7bn
    Less net debt
    USD 43.7bn
    Equity value
    USD 133.0bn

    Spread between methods: 4%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.44%341.65380.47432.72506.62618.92
    6.44%257.14278.38305.18339.93386.71
    7.44%201.13213.85229.25248.26272.23
    8.44%161.31169.37178.88190.24204.01
    9.44%131.55136.86143.01150.20158.69

    Outlined: this model. Green text: above today's price of 218.15. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-3.8%2.9%2.4%
    EBIT margin13.4%12.0%11.6%
    Discount rate-7.4%7.6%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.