QS Research · Michael Burry's Scion Capital analyst template · 2006
LOWES COMPANIES INC (LOW)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -6% · downside -40% · upside +29%
The market is treating LOW's guidance cut and DIY/housing weakness as if the earnings base were impaired, but the cycle says otherwise: normalized FY2021-FY2026 operating income is $10.68B, EBITDA $12.60B, net income $6.99B and FCF $7.63B (S2), versus TTM EBIT $10.29B (N13), EBITDA $12.76B (N14), net income $6.62B (N15) and FCF $7.00B (N18), so TTM is close to normalized and the call is not relying on a heroic recovery. On the section-13 normalized EBITDA base, 12.7x (N27) x $12.60B = $160.02B EV, less $36.51B net debt (S2; N21, N22) and $4.76B leases (N23), divided by 561.05M shares (N5) = $211.65, about -6% versus $224.55 (N1); downside at 9.3x is $135 (-40%) and upside at 16.2x is $290 (+29%). The long rule fails because downside is worse than -25%, and the short rule fails because base is not -30% and upside exceeds +25%. This is a watch: normalized cash generation and a 5.6% FCF yield (N30) are real, but the debt-funded FBM/ADG deal, negative equity and guidance reset leave too little margin of safety until comps and Pro integration prove out.
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 an omnichannel home improvement retailer with $86.29B revenue in FY2026 (year ended 2026-01-30), earning $28.89B gross profit, $10.15B operating income and $6.64B net income, selling through 1,759 US stores and outlets, lowes.com, on-site Pro specialists and more than 540 US/Canada branch locations. Revenue ran $89.60B (FY2021) up to a $97.06B peak (FY2023), down -11% to $86.38B (FY2024) and a $83.67B trough (FY2025) before recovering to $86.29B (FY2026), while operating income stayed in a $9.65B-$12.09B band across those six years, so this cycle hit sales harder than operating profit. Operating cash flow was positive every year ($8.14B-$11.05B) against capex of $1.79B-$2.21B, while buybacks ran from $14.12B (FY2023) down to $211.0M (FY2026) and equity fell from +$1.44B to -$9.92B even though net income was positive throughout. No TTM or quarterly figures and no segment or product-category revenue are in the sources, so the cycle frame here is annual only.
- ✓ 2. Competitive advantage
Lowe's has a scale-based retail and omnichannel network: 1,759 Lowe's-branded stores averaging about 112,000 square feet of retail selling space, 16 outlets, and over 540 Pro branches. But the 10-K describes a broad, highly competitive field with national and regional warehouse chains, lumber yards, hardware/plumbing/electrical distributors, paint and garden stores, general merchandise, warehouse clubs, online retailers, and installers. Gross profit dollars are below FY2023 and operating income is below the FY2022 peak; the sources do not document pricing power, customer switching costs, or licences.
- ✓ 3. 10-Q takeaways
Q2 FY2026 (quarter ended July 31, 2026) net sales were $25,956M vs $23,959M in Q2 FY2025, but gross margin fell to 33.04% of sales from 33.81% and operating margin to 13.67% from 14.48%, so net earnings were flat at $2,399M ($4.27 diluted vs $4.27). Dollar operating income rose ($3,549M vs $3,469M) but higher net interest ($374M vs $313M) and long-term debt ($35,204M vs $30,548M) took the increment. Cash is down to $3,172M from $4,860M, inventory is up to $17,737M from $16,342M, and goodwill/intangibles jumped to $3,957M/$5,709M from $691M/$976M, with the sources not explaining the step-up. The filing excerpt gives no comparable-sales figure, no guidance, no cash-flow or buyback detail, and no new risk factor content.
- ✓ 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
- ○ 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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