Term Paper on "Financial Review of Lowe's Home Improvement Warehouse"

Term Paper 6 pages (1528 words) Sources: 0

[EXCERPT] . . . .

Financial Review Lowe's Home Improvement Warehouse

Lowe's History and Overview

The home improvement industry is one of the few industries that have grown in the past five years. The industry growth can be seen as a reflection of the increased homeownership rates and capital availability from mortgage refinances that have been made possible by the lowered interests rates in this challenged economy. Lowe's Home Improvement Warehouse

Lowe's Companies, Inc. is a home improvement retailer, with a specific emphasis on retail do-it-yourself (DIY) and commercial business customers. Lowe's specializes in offering products and services for home improvement, home decor, home maintenance, home repair and remodeling and maintenance of commercial buildings.

Though the DIY demographic is changing, detailed later, the home improvement industry shows no signs of slowing. The size of the Lowe's company will undoubtedly continue to expand. (Yahoo Finance Web site: (http://finance.yahoo.com/q/pr?s=low)

As of the end of the fiscal year ended January 30, 2004, Lowe's operated 952 stores in 45 states, with approximately 108.8 million square feet of retail selling space. A typical Lowe's home improvement store stocks more than 40,000 items, with hundreds of thousands of items available through its special order system. Each store carries a selection of national brand name merchandise. (Yahoo Finance Web site: (http://finance.yahoo.com/q/pr?s=low)

Lowes Home Improvement Warehouse represents an organization, which is an alternate to the economically challenged retail industry, in general. It is the second largest home improvement retailer of its kind, second only to Home Depot in size and sales. Yet, it has also earned the title, fastest growing home improvement retailer in the United States. Lowes has grown significantly over even the last fiscal year, reporting an investment level of $2 billion in 2003 building 130 new store and creating 26, 000 new jobs in a high unemployment economy. (Lowe's 2003 Social Responsibilities Report)

According to the Lowe's Social Responsibility Report for 2003 the individual community impact is significant 'An average investment of 18.5 Million and the creation of 170 jobs is seen in each community where Lowe's has opened another retail outlet. Though the home improvement industry itself has shown an overall increase, comparative to the growth of Lowe's the do-it-yourself (DIY) market has significantly changed over the past few years as target populations have altered to include a larger segment of the population, most notably women, who are directly involved with a majority of home improvement projects in the home.

While Baby Boomers are still a significant focus for companies in markets connected with home improvement, their habits have changed. While DIY spending growth has been relatively healthy in recent years, and do-it-yourselfers remain a key segment of the home improvement market, the DIY share of overall spending has nevertheless declined over the past 15 years. (Find SVP Web Site: (http://www.findsvp.com/focus/indonearticle.cfm?ArticleID=331337&PubID=4)

Some of the reasons for this possible decline include many associated with an economy in upturn from the bleak last few years of high unemployment and slow consumer spending.

Baby Boomers are becoming more interested in having professionals do the work, rather than spending weekends working on their homes. To take advantage of this opportunity, home improvement retailers are courting the professionals themselves, and offering installation services to the consumers. (Find SVP Web Site: (http://www.findsvp.com/focus/indonearticle.cfm?ArticleID=331337&PubID=4)

Regardless of the demographic of change associated with the traditional market of the Lowe's Home Improvement Warehouse the company has a very promising economic future. Lowe's and the home improvement industry stocks in general are clearly a win, win stock purchase, especially for the long-term investor.

Financial Review

Detailed information is freely available for the Lowe's corporation as it is a freely traded market player, in a growing industry. Additionally, detailed stock information is available at all the major sources, for the company. As can be seen from the charts and information below the company has a strong growth potential and has an impressive stock resume. The Current ratio is 1.374. The quick ratio is 4.02. The Inventory Turnover Ratio is 1.4 per quarter. The Debt ratio is 26.3 as compared to an industry average of 24.1. The profit margin on Sales ratio is 5 as compared to the industry average of 8.54. Many other statistics affect the company's earnings per share, an area that Lowe's is an industry leader in.

Data provided by Reuters, except where noted.

VALUATION MEASURES

Market Cap (intraday):

42.95B

Enterprise Value (4-Oct-04)3:

45.26B

Trailing P/E (ttm, intraday):

Forward P/E (fye 30-Jan-06)1:

PEG Ratio (5 yr expected) 1:

Price/Sales (ttm):

Price/Book (mrq):

Enterprise Value/Revenue (ttm)3:

Enterprise Value/EBITDA (ttm)3:

FINANCIAL HIGHLIGHTS

Fiscal Year

Fiscal Year Ends:

30-Jan

Most Recent Quarter (mrq):

31-Jul-04

Profitability

Profit Margin (ttm):

Operating Margin (ttm):

Management Effectiveness

Return on Assets (ttm):

Return on Equity (ttm):

Income Statement

Revenue (ttm):

33.90B

Revenue Per Share (ttm):

Revenue Growth (lfy)3:

Gross Profit (ttm)2:

9.61B

EBITDA (ttm):

4.25B

Net Income Avl to Common (ttm):

2.01B

Diluted EPS (ttm):

Earnings Growth (lfy)3:

Total Cash (mrq):

1.03B

Total Cash Per Share (mrq):

Total Debt (mrq)2:

3.70B

Total Debt/Equity (mrq):

Current Ratio (mrq):

Book Value Per Share (mrq):

Cash Flow Statement

From Operations (ttm)3:

3.23B

Free Cashflow (ttm)3:

TRADING INFORMATION

Stock Price History

Beta:

52-Week Change:

52-Week Change (relative to S&P500):

52-Week High (3-Nov-03):

52-Week Low (6-Aug-04):

50-Day Moving Average:

200-Day Moving Average:

Share Statistics

Average Volume (3-month):

Average Volume (10 day):

Shares Outstanding:

Float:

Held by Insiders:

Held by Institutions:

Shares Short (as of 8-Sep-04):

14.69M

Daily Volume (as of 8-Sep-04):

Short Ratio (as of 8-Sep-04):

Short % of Float (as of 8-Sep-04):

Shares Short (prior month):

12.89M

Dividends & Splits

Annual Dividend:

Dividend Yield:

Dividend Date:

29-Oct-04

Ex-Dividend Date:

13-Oct-04

Last Split Factor (new per old) 2:

Last Split Date:

02-Jul-01

http://finance.yahoo.com/q/ks?s=LOW

Detailed Quote

10/04/04-19:55:36 NYSE $55.05

Prev Close

Open

Bid

Bid Size

Ask

Ask Size

52 Wk High

52 Wk Low

Restricted

Volume

Pricing delayed 20 minutes.

1 day

1 mo

1 yr

5 yr

Interactive Charting

Key Measures (10/01/04)

Latest 12 Months / Most Recent Quarter

Company

Industry

S&P 500

P/E

Price/Book

Price/Sales

Price to Cash Flow

EPS

Dividend Rate

ROE

Debt/Equity

Company Snapshot

Dividend Reinvestment Plan

Last Reported Ex-Dividend Date

Dividends Paid per Share

Shares Out. 09/07/04

Market Cap. (mil) 10/01/04

Last Stock Split Factor 07/02/01 for 1

Pricing Momentum for LOW as of 10/01/04

Price Change Last 10 Days (%)

This Week's Momentum

10-Week Moving Avg.

Prior Week's Momentum

Latest Close as of 5 Day Average (%)

Latest Close as of 10 Day Average (%)

Price Change vs. Market This Week

Total Volume Last 10 Days (000s)

Daily Volume as of 10 Day Ave. Volume (%)

20 Day Volume Moving Average (000s)

http://www.hoovers.com/lowe's/--ID__10920,ticker__LOW -- /free-co-fin-stockquote.xhtml

Financial Health

Stock

Industry

Debt/Total Capital %

Cash $Mil*

Total Debt $Mil*

Cash Flow from Operations $Mil on balance sheet

Most companies in the home supply industry have very little debt, and judging by this stock's debt/total capitalization ratio, it is no exception. In fact, its debt/total capitalization is among the lowest in its industry.

Profitability http://im.morningstar.com/im/morearrow.gif

Stock

Industry

5 yr ROA %

TTM ROA %

5 yr Average Net Margin %

5 yr ROA and 5yr Average Net margin use fiscal year-end.

TTM=trailing 12 months. http://quicktake.morningstar.com/Stock/Diagnostics.asp?Country=USA&Symbol=LOW&stocktab=interpret

Challenges to the home improvement industry may adversely effect the DIY market, so much a part of the Lowe's demographic yet continued market growth is expected industry wide. Within the last five years, though the industry has slowed in growth Lowe's has had a consistent pattern of growth. It is also worth mentioning that Lowe's is an independent stock seller, meaning that the individual can invest without he intervention of a broker. Details can be found easily on the Lowe's website.

Year Chart

http://www.lowes.com/lkn?action=frameSet&url=www.shareholder.com/lowes/index2.cfm

Additionally many stock splits since the company became publicly traded have also greatly benefited long-term investors as can be seen by the companies stock performance history page.

Stock Performance History

To… READ MORE

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