Lowe’s Cos. Inc. (NYSE:LOW)

Current Income Tax Expense

The current income tax expense exhibited a strong upward trend from 2020 to 2023, increasing from 1,203 million US dollars to a peak of 2,787 million US dollars. However, in the years 2024 and 2025, there was a noticeable decline, with values decreasing to 2,444 million and then further to 2,188 million US dollars, respectively. This suggests that while current tax obligations intensified over the earlier periods, a reduction occurred in the most recent years under review.

Deferred Income Tax Expense

The deferred income tax expense showed significant volatility across the periods analyzed. It began with a positive expense of 139 million US dollars in 2020, followed by a sharp reversal to a negative amount (-99 million US dollars) in 2021, indicating a deferred tax benefit that year. The figure then returned to a positive 140 million US dollars in 2022, dropped again to a negative expense of -188 million US dollars in 2023, and finally stabilized with small positive amounts of 5 million and 8 million US dollars in 2024 and 2025, respectively. This fluctuation implies varying timing differences impacting deferred tax liabilities and assets over the years.

Total Income Tax Provision

The total income tax provision largely mirrored the trends observed in the current tax expense, reflecting its dominant contribution. The provision grew steadily from 1,342 million US dollars in 2020 to a high of 2,766 million in 2022, slightly declining to 2,599 million in 2023, followed by further decreases to 2,449 million and 2,196 million in 2024 and 2025, respectively. The pattern indicates an overall rise in income tax expenses with a peak in 2022, after which the tax burden diminished moderately.

Overall Analysis

The data reveals a general increase in the company's income tax expenses over the first part of the analyzed period, driven primarily by rising current tax expenses. The deferred tax expense contributed a variable effect, as evidenced by its oscillations between positive and negative values, reflecting changes in temporary differences or tax planning strategies. The subsequent decrease in both current and total tax expenses in the latter years may suggest changes in taxable income, tax rates, or deferred tax asset and liability adjustments. The stabilization of deferred tax expenses near zero in the last two years potentially indicates a reduction in deferred tax volatility.

The effective tax rate for the periods observed demonstrates variability with a general pattern of increase followed by stabilization. Starting at 23.9% in early 2020, the rate rose slightly in 2021 and 2022 to roughly 24.6% and 24.7%, respectively, then peaked significantly at 28.8% in early 2023 before decreasing to approximately 24.1% and 24.0% in the subsequent two years.

Statutory Federal Income Tax Rate

The federal tax rate remained stable at 21% throughout all periods, serving as a constant base for the effective tax rate calculations.

State Income Taxes, Net of Federal Tax Benefit

The state tax component showed minor fluctuations, generally hovering near 4%. It peaked at 4.8% in early 2023 before declining to 3.7% by early 2025, reflecting some variability in state-level tax obligations.

Valuation Allowance

This category exhibited notable volatility with missing data in some years. Starting from 1.3% in 2020, it surged to 5.5% in early 2023, then dropped sharply to 0.7% in 2024 and turned slightly negative by 2025 at -0.4%, indicating changes in deferred tax asset assessments or recoverability considerations.

Expiration of Capital Loss Carryforward

Information on this item was unavailable initially but appeared at 2.5% in 2023 and dropped significantly thereafter to 0.1% in 2025, suggesting a diminishing impact on the tax rate from previously carried-forward capital losses.

Loss on Divestiture of Canadian Retail Business

Data for this factor emerged as a negative adjustment, with -4.1% in 2023 reducing in magnitude to -1.0% in 2024, likely reflecting one-time tax benefits or write-offs related to the divestiture activities.

Mexico Impairment

Recorded only in 2020 at -1.4%, this impairment appears to be a unique event affecting that year’s effective tax rate, absent in subsequent years.

Other, Net

This residual category consistently shows small negative impacts on the tax rate, varying between -1.1% and -0.3%, implying minor deductions or tax adjustments unrelated to main categories.

Overall, the pattern indicates that while the base statutory rate was stable, several transient and fluctuating adjustments, including valuation allowances, one-time impairments, divestitures, and expiring losses, have caused variability in the effective tax rate. The peak observed in early 2023 appears to be driven primarily by a combination of increased valuation allowance and higher state income taxes, partially offset by divestiture-related deductions. In subsequent periods, normalization of these components brought the effective rate closer to prior levels.

The financial data reveals several notable trends and fluctuations across different categories over the periods analyzed.

Self-insurance

There is a gradual decline in self-insurance amounts from US$260 million in 2020 to US$233 million in 2025, indicating a steady reduction in this liability over time.

Share-based payment expense

The expense increased significantly from US$30 million in 2020, peaking at US$64 million in 2023, before decreasing moderately to US$46 million by 2025. This suggests increased share-based compensation costs, with some retraction in the most recent periods.

Operating lease liabilities

These liabilities show minor fluctuations, with a decrease from US$1377 million in 2020 to US$1126 million in 2023, followed by a slight increase to US$1143 million in 2025. The overall trend suggests a gradual reduction in lease liabilities but with some stabilization recently.

Capital loss carryforwards

This item remains stable at US$225 million through 2022 but then increases sharply to US$722 million in 2023, subsequently declining to US$645 million by 2025. This rise and subsequent decline may indicate utilization or reassessment of capital loss carryforwards within this period.

Net operating losses

After remaining relatively constant near US$270 million from 2020 to 2021, the net operating losses increased notably to US$409 million in 2023, then decreased steadily to US$261 million in 2025. This pattern could reflect periods of increased operating loss utilization or adjustments in tax loss recognition.

Other, net (asset side)

The other net assets fluctuate, with an increase from US$131 million in 2020 to US$446 million in 2023, followed by a reduction to US$390 million in 2025. This indicates variability in miscellaneous asset items that have grown significantly before moderating.

Deferred tax assets

Deferred tax assets increase from US$2296 million in 2020 to a peak of US$2951 million in 2023, then gradually decrease to US$2718 million in 2025. This suggests accumulation of deferred tax benefits followed by some utilization or write-down.

Valuation allowance

The valuation allowance becomes more negative over the years, from -US$561 million in 2020 to -US$1136 million in 2023, before partially recovering to -US$1003 million in 2025. This pattern implies increased reserves against deferred tax assets with some reversal or reassessment in recent periods.

Net deferred tax assets

Net deferred tax assets show growth from US$1735 million in 2020 to US$1895 million in 2021, then a mild decline to US$1715 million in 2025. The fluctuations reflect changes in deferred tax assets adjusted for valuation allowances.

Operating lease right-of-use assets

These assets decrease markedly from -US$1198 million in 2020 to -US$974 million in 2023, followed by slight increases to around -US$1012 million in 2025. The negative values and variation indicate the impact of lease accounting adjustments over time.

Property

Property values fluctuate, with an increase in negative value from -US$293 million in 2020 to -US$438 million in 2023, then a recovery to -US$315 million in 2025. This suggests periodic changes in property-related deferred tax liabilities or asset adjustments.

Other, net (liability side)

Other net liabilities show a marked increase in negative value from -US$28 million in 2020 to -US$155 million in 2025, indicating growing miscellaneous tax liabilities.

Deferred tax liabilities

Deferred tax liabilities evolve from -US$1519 million in 2020 to a peak negative value of -US$1690 million in 2022 before improving to -US$1471 million in 2025, signifying fluctuating deferred tax obligations that generally decrease in recent years.

Net deferred tax assets (liabilities)

This metric fluctuates, starting at US$216 million in 2020, rising to US$340 million in 2021, then showing volatility before stabilizing near US$244 million in 2025. This indicates a moderate net asset position after balancing deferred tax assets and liabilities.

The analysis of deferred tax assets over the observed six-year period reveals variability with no consistent upward or downward trajectory. Initially, the balance was recorded at 216 million US dollars in the year ending January 2020. This figure experienced a significant increase to 340 million US dollars by January 2021, representing a notable rise in deferred tax assets within that period.

Following this peak, there was a sharp decline to 164 million US dollars by January 2022, more than halving from the previous year. Subsequently, the amount increased again to 250 million US dollars by February 2023 and remained relatively stable thereafter, with a slight decrease to 248 million US dollars in February 2024 and 244 million US dollars in January 2025.

Trend Summary:

The deferred tax assets exhibit a pattern of significant fluctuation during the early years followed by stabilization. After peaking in 2021, the item experienced a sizeable reduction in 2022 before settling into a range just below 250 million US dollars.

Insights:

This volatility could imply changes in tax planning, recognition of tax benefits, or adjustments in the company’s expectations regarding future taxable income. The stabilization in the last three periods suggests a more consistent approach or fewer adjustments in deferred tax assets during recent years.

The financial data reveals several notable trends over the examined periods. Total assets, both reported and adjusted, exhibit an overall rise from the beginning to the earlier years followed by a gradual decline and a slight rebound towards the latest period. Reported total assets increased from about 39.5 billion to a peak near 46.7 billion within the first two years, then decreased to roughly 41.8 billion before recovering marginally to 43.1 billion. Adjusted total assets follow a very similar pattern, remaining slightly lower but closely tracking the reported figures.

Shareholders’ equity presents a contrasting trend with a significant deterioration over time. Initially, both reported and adjusted equity were positive, starting around 1.9 billion and 1.8 billion respectively, but then sharply declined into negative territory by the third period. The negative equity deepens sharply reaching approximately -15.0 billion reported and -15.3 billion adjusted in the most recent years, indicating growing financial stress or accumulation of losses not fully offset by capital or retained earnings. Adjusted equity values are consistently slightly lower than reported figures but follow the same trajectory.

Net earnings demonstrate a volatile but generally strong performance with some fluctuations. Reported net earnings climbed strongly from 4.3 billion to 8.4 billion through the first three years, before decreasing to about 6.4 billion and then increasing again to approximately 7.7 billion, followed by a slight decline to around 7.0 billion most recently. Adjusted net earnings are generally in close alignment with reported net earnings, showing a similar pattern of growth, decline, and moderate recovery.

Total Assets

Increased significantly in the initial years, peaking in the second period, followed by a gradual decline and slight recovery in the latest period, with adjusted values closely mirroring reported values.

Shareholders’ Equity

Shifted sharply from positive to substantial negative values starting in the third year and deepening thereafter, indicating increasing deficits and potential balance sheet challenges. Adjusted equity is slightly lower than reported across all periods.

Net Earnings

Exhibited significant growth in the early periods, peaking in the third year, followed by fluctuations with a downward trend and partial recovery, maintaining a positive earnings trajectory overall. Adjusted earnings closely track reported earnings.

In summary, while asset levels showed resilience with initial growth and later stabilization, the equity position deteriorated substantially, emphasizing potential financial distress or impact from accumulated losses. Earnings remained positive with notable volatility but without erasing the trend of declining equity. Adjustments for deferred and annual income taxes have a subtle but consistent effect, slightly lowering equity and total asset values while marginally affecting reported earnings, indicating conservative adjustments in accounting for tax impacts.

The financial data over the reported periods reveals several notable trends across profitability, efficiency, and leverage metrics after adjustment for deferred income tax effects.

Net Profit Margin

The reported net profit margin demonstrated an overall upward trend from 5.93% in early 2020 to a peak of 8.94% in early 2024, with a slight decline to 8.31% in early 2025. The adjusted net profit margins closely followed this pattern, starting at 6.13%, peaking at 8.95%, and settling near 8.32%. This suggests that the company’s profitability improved consistently until 2024, with minor contraction thereafter, while the adjustment for deferred taxes had a marginal impact on margin levels.

Total Asset Turnover

The reported total asset turnover increased from 1.83 times in 2020 to a peak of 2.22 times in early 2023, followed by a gradual decline to 1.94 times by early 2025. Adjusted figures were very similar, indicating minimal distortion from tax-related adjustments. This indicates that asset utilization efficiency improved significantly until early 2023 but experienced a slight reduction subsequently.

Financial Leverage

Reported financial leverage showed a marked increase from 20.02 times in 2020 to 32.52 times in 2021, with adjusted leverage reflecting an even sharper rise from 22.35 to 42.29 times in the same period. Data beyond early 2021 is missing, limiting trend analysis. The substantial increase in leverage ratios suggests the company took on considerable additional debt or financial obligations during this timeframe, with tax adjustments amplifying leverage metrics.

Return on Equity (ROE)

ROE yielded by reported figures surged dramatically from 217.09% in 2020 to 406.05% in 2021. The adjusted ROE was even higher, climbing to 522.88% by 2021. Since data for subsequent years is unavailable, further conclusions cannot be drawn. The exceptionally high ROE values imply significant financial leverage impact or one-time effects influencing equity returns during this interval.

Return on Assets (ROA)

The reported ROA exhibited a strong upward trajectory from 10.85% in 2020 to a peak of 18.91% in 2022, before trending downward to 16.14% by early 2025. Adjusted ROA followed a similar pattern, peaking at 19.3% and tapering to 16.25%. This trend denotes increasing asset profitability until 2022 with some moderation afterwards. The close alignment of adjusted and reported ROA indicates limited influence from deferred tax adjustments on asset returns.

Overall, the data reflects improvements in profitability and asset utilization up to approximately 2022–2023, with a slight easing thereafter. Financial leverage escalated sharply from 2020 to 2021, potentially indicating strategic funding changes or capital structure shifts. The adjustments for deferred income taxes generally resulted in moderate increases in profitability and leverage measures but did not materially alter the direction of key financial trends.

Net Earnings Trends

The reported net earnings show an overall upward trend from 4,281 million US dollars in early 2020 to a peak of 7,726 million in early 2024, followed by a decline to 6,957 million in early 2025. Adjusted net earnings generally follow a similar pattern, starting at 4,420 million in 2020, reaching a high of 7,731 million in 2024, and then decreasing slightly to 6,965 million in 2025. The adjustments result in slightly higher net earnings figures in most years.

Net Profit Margin Trends

Reported net profit margin experiences growth from 5.93% in 2020 to 8.94% in 2024 before declining modestly to 8.31% in 2025. The adjusted net profit margin closely mirrors this trend, increasing from 6.13% in 2020 to 8.95% in 2024 and then slightly decreasing to 8.32% by 2025. Adjusted margins are consistently marginally higher than the reported figures across all periods.

Comparative Insights

The alignment between adjusted and reported figures suggests that the adjustments, including deferred income tax considerations, have a relatively modest impact on overall earnings and profitability metrics. The increasing trends in both earnings and margins through 2024 indicate improving financial performance, although the decline observed in 2025 may warrant further investigation to understand underlying causes.

Summary

Overall, the data reflects a period of growth and improved profitability from 2020 to 2024 with slight contractions in the latest year. Adjusted figures confirm these patterns with minor enhancements over reported results, indicating consistent positive financial adjustments related to income taxes. The slight downturn in 2025 suggests a shift in earnings dynamics that should be monitored for potential impacts on future performance.

An analysis of the financial data over the six-year period reveals several notable trends in the company's asset base and its efficiency in generating revenue from assets.

Total Assets

Both reported and adjusted total assets demonstrate a general decline after peaking in the fiscal year ending January 29, 2021. Reported total assets increased from approximately $39.5 billion in 2020 to about $46.7 billion in 2021, followed by a gradual decrease to roughly $43.1 billion by 2025. Adjusted total assets show a similar pattern, starting from approximately $39.3 billion in 2020, rising to $46.4 billion in 2021, and subsequently declining to nearly $42.9 billion by 2025. This downward trend after 2021 may reflect asset disposals, write-downs, or other operational adjustments impacting the asset base. The adjustment between reported and adjusted figures remains relatively small, indicating minor reclassifications or tax-related recalibrations throughout the period.

Total Asset Turnover

The measured efficiency in using assets to generate sales, as indicated by total asset turnover ratios, improved notably from 2020 through 2023. Reported total asset turnover rose from 1.83 in 2020 to a peak of 2.22 in 2023, while adjusted turnover experienced a similar rise from 1.84 to 2.23 over the same time frame. However, post-2023, both turnover measures declined moderately, reaching 1.94 (reported) and 1.95 (adjusted) in 2025. This pattern suggests that the company became increasingly effective at generating sales from its asset base up until early 2023, followed by a slight reduction in efficiency or a change in asset utilization strategies in subsequent years.

Comparison Between Reported and Adjusted Figures

The closeness of reported and adjusted values across both total assets and asset turnover ratios reflects minimal impact from adjustments, which likely relate to deferred or annual income tax considerations. The adjustments have not significantly altered the assessment of asset size or turnover efficiency, implying consistency in financial reporting and tax-related adjustments over the period.

In summary, the company experienced asset growth until 2021, followed by a gradual reduction, while asset turnover improved until 2023 before slightly declining. The adjustments made for income tax effects did not substantially change these fundamental trends, indicating that operational factors primarily drove the observed changes.

Total Assets

The reported total assets initially increased from 39,471 million US dollars in early 2020 to a peak of 46,735 million in early 2021. Following this peak, there was a steady decline reaching 41,795 million in early 2024, with a slight uptick to 43,102 million projected for early 2025. The adjusted total assets exhibit a similar trend, peaking at 46,395 million in early 2021 before declining to 41,547 million in early 2024 and then increasing marginally to 42,858 million in early 2025. This indicates a general contraction of asset base after 2021, with stabilization towards the later years.

Shareholders’ Equity (Deficit)

The reported shareholders’ equity shows a significant downward trajectory, starting from a positive 1,972 million in 2020 and decreasing sharply to a negative 4,816 million by early 2022. This negative trend worsens substantially to negative 14,254 million in early 2023 and remains at similarly negative levels in subsequent years, slightly improving to negative 14,231 million by early 2025. The adjusted shareholders’ equity closely mirrors this pattern with slightly larger magnitudes in deficit, suggesting persistent and worsening equity erosion over the period analyzed. This reflects financial distress or accumulated losses impacting the company’s net worth.

Financial Leverage

Reported financial leverage ratios are available only for 2020 and 2021, showing a marked increase from 20.02 in 2020 to 32.52 in 2021. The adjusted financial leverage ratio follows the same pattern but with higher values, rising from 22.35 to 42.29 over the same timeframe. The increase in leverage ratios suggests a growing reliance on debt financing relative to equity during these years, consistent with the deteriorating equity figures. No data is available for leverage in subsequent years, precluding trend analysis beyond 2021.

Net Earnings

The reported net earnings exhibit an overall upward trend from 2020 to 2024, increasing from $4,281 million to a peak of $7,726 million in 2024, followed by a decline to $6,957 million in 2025. The adjusted net earnings follow a similar pattern, rising from $4,420 million in 2020 to $7,731 million in 2024, then slightly decreasing to $6,965 million in 2025. This consistency between reported and adjusted figures suggests stable adjustments related to income taxes.

Shareholders’ Equity (Deficit)

Both reported and adjusted shareholders’ equity display a marked deterioration over the period. Beginning with positive equity values in 2020 ($1,972 million reported, $1,756 million adjusted), there is a sharp decline into significant deficits from 2022 onwards, with reported equity falling to -$4,816 million in 2022 and further worsening to -$14,231 million by 2025. Adjusted equity values follow a similar trajectory, slightly more negative in comparison, reaching -$14,475 million by 2025. The increasing deficit signals substantial financial challenges affecting the company's capital base.

Return on Equity (ROE)

Available data for 2020 and 2021 indicate extraordinarily high ROE percentages, with reported ROE increasing from 217.09% in 2020 to 406.05% in 2021, and adjusted ROE increasing from 251.71% to 522.88% over the same period. This likely reflects the low or negative equity base rather than operational performance. No ROE data are reported beyond 2021, possibly due to the transition into negative equity territory, where ROE calculations are typically not meaningful.

General Observations

The data reveal a pattern of strong earnings generation despite deteriorating shareholders’ equity. The growth in net earnings is substantial through the early years but shows volatility with a notable dip after 2024. Meanwhile, the ongoing equity deficit suggests the company may be experiencing losses carried from previous periods, significant dividend payments, share buybacks, or other balance sheet actions that reduce equity. The absence of meaningful ROE data after 2021 highlights the impact of negative equity on key performance metrics.

The data reveals several notable trends in the reported and adjusted financial metrics over the six-year period.

Net Earnings

Reported net earnings showed a general upward trajectory from 4,281 million US dollars in 2020, peaking at 8,442 million in 2022. After a decline to 6,437 million in 2023, earnings rose again to 7,726 million in 2024, followed by a decrease to 6,957 million in 2025. Adjusted net earnings followed a similar pattern but were consistently marginally higher than reported figures, reflecting the impact of income tax adjustments on net profitability.

Total Assets

Reported total assets increased from 39,471 million US dollars in 2020 to a peak of 46,735 million in 2021. Following this peak, total assets trended downward, reaching 41,795 million in 2024 before increasing slightly to 43,102 million in 2025. Adjusted total assets mirrored this trajectory closely, consistently slightly lower than reported totals, indicating minor adjustments related to tax considerations.

Return on Assets (ROA)

Reported ROA exhibited significant improvement, rising from 10.85% in 2020 to a peak of 18.91% in 2022. This indicates a period of enhanced efficiency in asset utilization to generate earnings. However, ROA declined to 14.73% in 2023 before recovering to 18.49% in 2024 and settling at 16.14% in 2025. Adjusted ROA figures were slightly higher than reported figures throughout, suggesting positive effects from deferred income tax adjustments on profitability metrics.

Overall, the data demonstrates a phase of robust earnings growth and improving asset efficiency until 2022, followed by fluctuating profitability and slight contraction in asset base in the subsequent years. The comparability between reported and adjusted figures indicates that income tax-related adjustments had a modest but consistent impact on net earnings and asset-based returns throughout the period.