QS Research · Michael Burry's Scion Capital analyst template · 2006
LOWES COMPANIES INC (LOW)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case -2% · downside -4% · upside +7%
The market is paying 12.7x TTM EV/EBITDA for earnings that are already mid-cycle: FY2023-FY2026 average EBITDA is about $12.63B and TTM EBITDA is $12.76B, while revenue swung from $97.06B to $83.67B and operating income stayed $10.15B-$11.56B. At today's multiple the normalized equity value is about $221 per share, essentially the $224.55 close; using trough and peak cycle EBITDA at the same multiple gives only about $217 to $240. The problem is cyclical housing/DIY pressure and margin compression, not a permanent impairment, but there is no margin of safety and no cited positive catalyst that clearly re-rates the stock. I pass; a long needs either a lower price or evidence of durable housing/Pro-led recovery and margin stabilization.
Key numbers
- Share price: $224.55
- Market cap: $125.98B
- Latest financial period: TTM to Jul 31, 2026
- Revenue (TTM): $90.43B
- EV / EBITDA (TTM): 12.7x
- P/E (TTM): 19.0x
The 15 boxes
- ✓ 1. Long-form business notes
Lowe's is a U.S.-centered, single-banner home improvement retailer that makes money by selling building products and installed services through 1,759 stores/outlets (~196M sq ft) plus over 540 Pro branch locations added via the 2025 FBM and ADG acquisitions, monetizing both DIY and Pro demand. Revenue is cyclical: $97.06B in the year ended 2023-02-03 fell to $86.38B (-11%) and $83.67B before recovering to $86.29B in the year ended 2026-01-30, while operating income ranged $9.65B-$12.09B across the six years on file. Between the oldest and newest 10-K the footprint shrank and moved away from Canadian retail ownership (1,974 stores incl. 240 in Canada and RONA in FY2020) toward U.S. stores plus Pro branch distribution, with capital returns collapsing from $14.12B of buybacks (FY ended 2023-02-03) to $211.0M (FY ended 2026-01-30).
- ✓ 2. Competitive advantage
The sources do not establish a durable advantage. Lowe's competes in a highly competitive home improvement market with numerous large and small, direct and indirect competitors, and the 10-K's key factors are location, assortment, pricing, in-stock, service, and technology. It has scale—1,759 stores, over 540 Pro branches, and omnichannel fulfillment—but those are described as capabilities, not protected moats. Fiscal-year data show gross profit and operating income positive through the cycle and operating cash flow above capex, while total equity is negative; no source gives TTM.
- ✓ 3. 10-Q takeaways
Q2 2026 (quarter ended July 31, 2026) net sales rose to $25,956 million from $23,959 million, with comparable sales up 0.2% and online sales up 15.7%, but the mix came at a cost: gross margin fell to 33.04% from 33.81% and operating income was 13.67% of sales versus 14.48% a year earlier. Reported diluted EPS of $4.27 (flat with Q2 2025) carries an $0.11 IEEPA tariff refund benefit and sits alongside $96 million of pre-tax FBM/ADG acquisition expenses; adjusted diluted EPS was $4.40, up 1.6%. Management cut the numeric FY2026 outlook (sales to $92.0 billion, comps flat, operating margin 11.2%, diluted EPS ~$11.75), and the quarter saw no share repurchases, higher inventory and higher long-term debt with goodwill and intangibles jumping on the acquisitions.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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