Stock Analysis on Net

Lowe’s Cos. Inc. (NYSE:LOW)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Lowe’s Cos. Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Net operating profit after taxes (NOPAT)1 8,137 8,789 7,020 9,827 7,056 5,097
Cost of capital2 13.43% 13.58% 13.14% 13.99% 13.83% 11.84%
Invested capital3 26,276 25,913 24,710 26,296 28,534 26,717
 
Economic profit4 4,609 5,269 3,772 6,148 3,110 1,935

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 8,13713.43% × 26,276 = 4,609

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 2023 to 2024 but then slightly decreased from 2024 to 2025.

Net Operating Profit after Taxes (NOPAT)

Lowe’s Cos. Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Net earnings 6,957 7,726 6,437 8,442 5,835 4,281
Deferred income tax expense (benefit)1 8 5 (188) 140 (99) 139
Increase (decrease) in deferred revenue2 (7) (171) (237) 414 514 (13)
Increase (decrease) in equity equivalents3 1 (166) (425) 554 415 126
Interest expense, net of amount capitalized 1,472 1,483 1,160 897 872 718
Interest expense, operating lease liability4 179 174 152 167 172 182
Adjusted interest expense, net of amount capitalized 1,651 1,657 1,312 1,064 1,044 900
Tax benefit of interest expense, net of amount capitalized5 (347) (348) (276) (223) (219) (189)
Adjusted interest expense, net of amount capitalized, after taxes6 1,305 1,309 1,037 841 825 711
Interest income (159) (101) (37) (12) (24) (27)
Investment income, before taxes (159) (101) (37) (12) (24) (27)
Tax expense (benefit) of investment income7 33 21 8 3 5 6
Investment income, after taxes8 (126) (80) (29) (9) (19) (21)
Net operating profit after taxes (NOPAT) 8,137 8,789 7,020 9,827 7,056 5,097

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in deferred revenue.

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

4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 4,191 × 4.28% = 179

5 2025 Calculation
Tax benefit of interest expense, net of amount capitalized = Adjusted interest expense, net of amount capitalized × Statutory income tax rate
= 1,651 × 21.00% = 347

6 Addition of after taxes interest expense to net earnings.

7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 159 × 21.00% = 33

8 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 2023 to 2024 but then slightly decreased from 2024 to 2025.

Cash Operating Taxes

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

US$ in millions

Microsoft Excel
12 months ended: Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Income tax provision 2,196 2,449 2,599 2,766 1,904 1,342
Less: Deferred income tax expense (benefit) 8 5 (188) 140 (99) 139
Add: Tax savings from interest expense, net of amount capitalized 347 348 276 223 219 189
Less: Tax imposed on investment income 33 21 8 3 5 6
Cash operating taxes 2,501 2,771 3,055 2,847 2,217 1,386

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).

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 decreased from 2023 to 2024 and from 2024 to 2025.

Invested Capital

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

US$ in millions

Microsoft Excel
Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Short-term borrowings 499 1,941
Current maturities of long-term debt 2,586 537 585 868 1,112 597
Long-term debt, excluding current maturities 32,901 35,384 32,876 23,859 20,668 16,768
Operating lease liability1 4,191 4,224 4,034 4,657 4,431 4,444
Total reported debt & leases 39,678 40,145 37,994 29,384 26,211 23,750
Shareholders’ equity (deficit) (14,231) (15,050) (14,254) (4,816) 1,437 1,972
Net deferred tax (assets) liabilities2 (244) (248) (250) (164) (340) (216)
Deferred revenue3 2,626 2,633 2,804 3,041 2,627 2,113
Equity equivalents4 2,382 2,385 2,554 2,877 2,287 1,897
Accumulated other comprehensive (income) loss, net of tax5 (288) (300) (307) 36 136 136
Adjusted shareholders’ equity (deficit) (12,137) (12,965) (12,007) (1,903) 3,860 4,005
Construction in progress6 (616) (708) (793) (715) (831) (506)
Investments7 (649) (559) (484) (470) (706) (532)
Invested capital 26,276 25,913 24,710 26,296 28,534 26,717

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).

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 equity equivalents to shareholders’ equity (deficit).

5 Removal of accumulated other comprehensive income.

6 Subtraction of construction in progress.

7 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 2023 to 2024 and from 2024 to 2025.

Cost of Capital

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

Capital (fair value)1 Weights Cost of capital
Equity2 130,350 130,350 ÷ 166,574 = 0.78 0.78 × 16.28% = 12.74%
Debt, including finance lease obligations3 32,033 32,033 ÷ 166,574 = 0.19 0.19 × 3.97% × (1 – 21.00%) = 0.60%
Operating lease liability4 4,191 4,191 ÷ 166,574 = 0.03 0.03 × 4.28% × (1 – 21.00%) = 0.09%
Total: 166,574 1.00 13.43%

Based on: 10-K (reporting date: 2025-01-31).

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 145,335 145,335 ÷ 182,827 = 0.79 0.79 × 16.28% = 12.94%
Debt, including finance lease obligations3 33,268 33,268 ÷ 182,827 = 0.18 0.18 × 3.96% × (1 – 21.00%) = 0.57%
Operating lease liability4 4,224 4,224 ÷ 182,827 = 0.02 0.02 × 4.11% × (1 – 21.00%) = 0.08%
Total: 182,827 1.00 13.58%

Based on: 10-K (reporting date: 2024-02-02).

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 113,624 113,624 ÷ 148,912 = 0.76 0.76 × 16.28% = 12.42%
Debt, including finance lease obligations3 31,254 31,254 ÷ 148,912 = 0.21 0.21 × 3.86% × (1 – 21.00%) = 0.64%
Operating lease liability4 4,034 4,034 ÷ 148,912 = 0.03 0.03 × 3.78% × (1 – 21.00%) = 0.08%
Total: 148,912 1.00 13.14%

Based on: 10-K (reporting date: 2023-02-03).

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 150,571 150,571 ÷ 181,324 = 0.83 0.83 × 16.28% = 13.52%
Debt, including finance lease obligations3 26,096 26,096 ÷ 181,324 = 0.14 0.14 × 3.53% × (1 – 21.00%) = 0.40%
Operating lease liability4 4,657 4,657 ÷ 181,324 = 0.03 0.03 × 3.59% × (1 – 21.00%) = 0.07%
Total: 181,324 1.00 13.99%

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 130,462 130,462 ÷ 159,901 = 0.82 0.82 × 16.28% = 13.28%
Debt, including finance lease obligations3 25,008 25,008 ÷ 159,901 = 0.16 0.16 × 3.74% × (1 – 21.00%) = 0.46%
Operating lease liability4 4,431 4,431 ÷ 159,901 = 0.03 0.03 × 3.88% × (1 – 21.00%) = 0.08%
Total: 159,901 1.00 13.83%

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 51,186 51,186 ÷ 77,097 = 0.66 0.66 × 16.28% = 10.81%
Debt, including finance lease obligations3 21,467 21,467 ÷ 77,097 = 0.28 0.28 × 3.83% × (1 – 21.00%) = 0.84%
Operating lease liability4 4,444 4,444 ÷ 77,097 = 0.06 0.06 × 4.10% × (1 – 21.00%) = 0.19%
Total: 77,097 1.00 11.84%

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 »


Economic Spread Ratio

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

Microsoft Excel
Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 4,609 5,269 3,772 6,148 3,110 1,935
Invested capital2 26,276 25,913 24,710 26,296 28,534 26,717
Performance Ratio
Economic spread ratio3 17.54% 20.33% 15.27% 23.38% 10.90% 7.24%
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc. 0.02% -5.63% -16.83% 3.18% 0.52%
Home Depot Inc. 9.45% 15.51% 19.50% 23.98% 14.81% 21.97%
TJX Cos. Inc. 9.57% 6.57% 6.53% -10.38% 7.33%

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 4,609 ÷ 26,276 = 17.54%

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 2023 to 2024 but then slightly deteriorated from 2024 to 2025 not reaching 2023 level.

Economic Profit Margin

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

Microsoft Excel
Jan 31, 2025 Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 4,609 5,269 3,772 6,148 3,110 1,935
 
Net sales 83,674 86,377 97,059 96,250 89,597 72,148
Add: Increase (decrease) in deferred revenue (7) (171) (237) 414 514 (13)
Adjusted net sales 83,667 86,206 96,822 96,664 90,111 72,135
Performance Ratio
Economic profit margin2 5.51% 6.11% 3.90% 6.36% 3.45% 2.68%
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc. 0.01% -3.17% -8.78% 1.37% 0.20%
Home Depot Inc. 4.32% 5.69% 6.85% 7.62% 5.57% 7.29%
TJX Cos. Inc. 3.73% 2.68% 2.65% -7.22% 3.29%

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).

1 Economic profit. See details »

2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 4,609 ÷ 83,667 = 5.51%

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 2023 to 2024 but then slightly deteriorated from 2024 to 2025.