Financial ratios & growth analysis

Financial Analysis Report On: Lowe’s 

FINC 6352- Financial Management

Dr. Xavier Garza Gomez

By: Rebecca Adams and Alexis Giusti

DATE

(1) Company Profile

Source: http://careers.lowes.com/media/39421/loweshistory.pdf  

Lowe's Companies, Inc., founded in 1946, originated in North Carolina as a classic small-town hardware store selling everything from overalls to wash tubs, work boots and even horse collars. Sales grew over time, and Lowe’s stores opened in neighboring towns throughout western North Carolina. By eliminating wholesalers and dealing directly with manufacturers, Lowe’s established a lasting reputation for low prices. The company primarily sells home improvement, hardware and appliance items, focusing on do-it-yourself homeowners seeking to improve the value of their properties. Lowe’s stores stock 40,000 products and have hundreds of thousands more available by Special Order — offering everything customers need to build, maintain, amplify and enjoy their homes.

Sector: Consumer Services

Industry: RETAIL: Building Materials

Ticker: LOW

Market Cap 156,545,159,364

Revenue (ttm) 95.22 B 

Net Income Avi to Common (ttm) 8.18B

Full Time Employees 300,000 

Lowe’s competitors in the construction equipment manufacturing industry

Company	Ticker	Based on	Market Cap	Revenue	Net income
The Home Depot, Inc.	HD	US	379.90B	36.82 B	4.13 B
Walmart Inc.	WMT	US	388.90 B	559.2 B	13.7 B

(2) Show financial ratios for company and main competitors

Students will prepare tables and charts using financial ratios from D&B Hoovers and Mergent Online (accessible from http://vcuhvlibrary.uhv.edu/) and report the categories below for the company under study and at least two of its competitors.

· Market Value Ratios (D&B)

· Profitability Ratios (Mergent)

· Asset Management (Mergent)

· Debt Management (Mergent)

· Liquidity Ratios (Mergent) Students don’t need to calculate the ratios, just take them from the D&B or Mergent and merge with the numbers from the competitors. For each of the categories of ratios, students will identify if the firm is average, below average or above average relative to competitors. The leader in each category must be identified. Report areas in which the company is leading and where it is lagging. Trends observed for the most recent 15 years must be commented in the report.

(3) Trend analysis

Students will obtain 15 years of financial data from Mergent Online for the company under study. They must obtain a balance sheet, income statement and statement of cash flows and they must download two reports: the standardized statements and the “As reported”. They will plot charts for Sales, income, EPS, Assets, Shareholders equity and shares outstanding and other relevant variables. Students will then try to identify key trends in performance and/or important financial ratios that can be linked to the business strategy.

4. DuPont Analysis

Students will calculate components of DuPont identity and plot them for recent years. Students should describe the performance of each component and identify possible changes in business strategy.

5. Growth Analysis

Students will calculate growth rate for relevant variables that were plotted before (Sales, income, EPS, Assets, Shareholders equity and shares outstanding, etc.) and determine how mature the company is and how efficient the company is when pursuing growth.

6. Growth Projection

Students will plot year-by year growth rates and conclude about possible future growth for key variables (sales, earnings, dividends)