Lowe's (Low)

The Business

Lowe’s Companies, Inc. operates as a home improvement retailer in the United States and Canada. It offers a line of products and services for home decorating, maintenance, repair, remodeling, and property maintenance. The company’s home improvement store stocks a selection of national brand name merchandise of approximately 40,000 items. It serves homeowners, including retail do-it-yourself customers and do-it-for-me customers; renters; and commercial business customers, such as repair and remodeling contractors, electricians, landscapers, painters, plumbers, and commercial and residential property maintenance professionals. Lowe’s Companies also owns and operates flatbed distribution centers to distribute merchandise that requires special handling due to size or type of packaging such as lumber, boards, panel products, irrigation pipe, vinyl sidings, ladders, and building materials. In addition, it provides installation services. The company markets its products through television, radio, newspaper, magazine, direct mail, sponsorships, Internet, and in store programs, as well as through special order sales system. As of September 14, 2006, the company operated 1,275 stores in 49 states, as well as owned and operated approximately 10 flatbed distributions centers. Lowe’s Companies was founded in 1946 and is based in Mooresville, North Carolina.

Home Depot’s bitter rival and what many consider the better of the two. Lowe’s currently trades at a P/E of 14 with a 5 yr average of 23 it definitely on the bargain end. When measured by price-to-book value it trades at 3.1 times book value, well below its historical average. . Its trailing twelve months free cash flow of 650 million is more than enough to get it through tough times. Not only does it have an abundance of cash, it has been growing that free cash flow and reinvesting it. The result of the reinvesting and expansion has resulted with a ROE of 22% and a ROA of 12% for the past 5 years. Its strong financial situation will also help Lowe’s expand into China and other emerging markets like its counterpart Home Depot. The market’s fear of a depressing market slowdown has brought the stock down creating a buying opportunity. The stock IMO is worth around $45

Disclaimer: I own this stock