Lowe's Companies, Inc. (LOW) Discounted Future Market Cap

Lowe's Companies, Inc.

LOW (NYSE)

(%)

Valuation
Lowe's Companies, Inc. Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	176.4 USD
Estimated net income	6.55 Bil. USD
Estimated market capitalization	149.2 Bil. USD
Market capitalization discounted to present	98.59 Bil. USD
Shares Outstanding	559 Mil.
Earnings Per Share (EPS)	12.09 USD
Market Price	276.9 USD
Price to Earnings (PE) Ratio	22.8

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2015", "x": "2016-01-31", "y": 59074000000}, {"l": "2016", "x": "2017-01-31", "y": 65017000000}, {"l": "2017", "x": "2018-01-31", "y": 68619000000}, {"l": "2018", "x": "2019-01-31", "y": 71309000000}, {"l": "2019", "x": "2020-01-31", "y": 72148000000}, {"l": "2020", "x": "2021-01-31", "y": 89597000000}, {"l": "2021", "x": "2022-01-31", "y": 96250000000}, {"l": "2022", "x": "2023-01-31", "y": 97059000000}, {"l": "2023", "x": "2024-01-31", "y": 86377000000}, {"l": "2024", "x": "2025-01-31", "y": 83674000000}, {"l": "2025", "x": "2026-01-31", "y": 87080368540, "oy": 87080368540, "e": true, "d": 2025, "g": 4.07, "og": 4.07}, {"l": "2026", "x": "2027-01-31", "y": 90625410343, "oy": 90625410343, "e": true, "d": 2026, "g": 4.07, "og": 4.07}, {"l": "2027", "x": "2028-01-31", "y": 94314770798, "oy": 94314770798, "e": true, "d": 2027, "g": 4.07, "og": 4.07}, {"l": "2028", "x": "2029-01-31", "y": 98154325117, "oy": 98154325117, "e": true, "d": 2028, "g": 4.07, "og": 4.07}, {"l": "2029", "x": "2030-01-31", "y": 102150187693, "oy": 102150187693, "e": true, "d": 2029, "g": 4.07, "og": 4.07}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2015", "x": "2016-01-31", "y": 2546000000}, {"l": "2016", "x": "2017-01-31", "y": 3091000000}, {"l": "2017", "x": "2018-01-31", "y": 3447000000}, {"l": "2018", "x": "2019-01-31", "y": 2314000000}, {"l": "2019", "x": "2020-01-31", "y": 4281000000}, {"l": "2020", "x": "2021-01-31", "y": 5835000000}, {"l": "2021", "x": "2022-01-31", "y": 8442000000}, {"l": "2022", "x": "2023-01-31", "y": 6437000000}, {"l": "2023", "x": "2024-01-31", "y": 7726000000}, {"l": "2024", "x": "2025-01-31", "y": 6957000000}, {"l": "2025", "x": "2026-01-31", "y": 5580110016, "oy": 5580110016, "e": true, "d": 2025, "g": -19.79, "og": -19.79}, {"l": "2026", "x": "2027-01-31", "y": 5807276294, "oy": 5807276294, "e": true, "d": 2026, "g": 4.07, "og": 4.07}, {"l": "2027", "x": "2028-01-31", "y": 6043690512, "oy": 6043690512, "e": true, "d": 2027, "g": 4.07, "og": 4.07}, {"l": "2028", "x": "2029-01-31", "y": 6289729153, "oy": 6289729153, "e": true, "d": 2028, "g": 4.07, "og": 4.07}, {"l": "2029", "x": "2030-01-31", "y": 6545784027, "oy": 6545784027, "e": true, "d": 2029, "g": 4.07, "og": 4.07}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-01-31": 41, "2027-01-31": 42, "2028-01-31": 43, "2029-01-31": 44, "2030-01-31": 45}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-01-31	2027-01-31	2028-01-31	2029-01-31	2030-01-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2024 Jan 31	LTM Feb 04	2025 Jan 31	2026 Jan 31	2027 Jan 31	2028 Jan 31	2029 Jan 31
Revenue	83,674	84,255	87,080	90,625	94,315	98,154	102,150
Revenue Growth Rate	-3.13%	0.694%	4.07%	4.07%	4.07%	4.07%	4.07%
Net Income	6,957	6,779	5,580	5,807	6,044	6,290	6,546

Monetary values in USD

amounts except #

2024
Jan 31

LTM
Feb 04

2025
Jan 31

2026
Jan 31

2027
Jan 31

2028
Jan 31

2029
Jan 31

Revenue

83,674

84,255

87,080

90,625

94,315

98,154

102,150

Revenue Growth Rate

-3.13%

0.694%

4.07%

Net Income

6,957

6,779

5,580

5,807

6,044

6,290

6,546

Historical Values

Monetary values in USD amounts except #	Average	LTM Feb 04	2024 Jan 31	2023 Jan 31	2022 Jan 31	2021 Jan 31	2020 Jan 31	2019 Jan 31	2018 Jan 31	2017 Jan 31	2016 Jan 31	2015 Jan 31
Revenue	79,398	84,255	83,674	86,377	97,059	96,250	89,597	72,148	71,309	68,619	65,017	59,074
Cost of Revenue	54,579	57,778	57,526	59,250	66,568	65,856	61,424	50,467	49,878	47,589	44,042	39,988
Gross Profit	24,819	26,477	26,148	27,127	30,491	30,394	28,173	21,681	21,431	21,030	20,975	19,086
Gross Margin	31.26%	31.42%	31.25%	31.41%	31.41%	31.58%	31.44%	30.05%	30.05%	30.65%	32.26%	32.31%
Operating Income	8,882	10,194	10,112	11,534	12,660	12,255	10,882	6,579	6,105	6,586	5,813	4,981
Operating Margin	10.92%	12.1%	12.08%	13.35%	13.04%	12.73%	12.15%	9.12%	8.56%	9.6%	8.94%	8.43%
Net Income	5,260	6,779	6,957	7,726	6,437	8,442	5,835	4,281	2,314	3,447	3,091	2,546
Net Margin	6.41%	8.05%	8.31%	8.95%	6.63%	8.77%	6.51%	5.93%	3.25%	5.02%	4.75%	4.31%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Feb 04	2024 Jan 31	2023 Jan 31	2022 Jan 31	2021 Jan 31	2020 Jan 31	2019 Jan 31	2018 Jan 31	2017 Jan 31	2016 Jan 31	2015 Jan 31
Revenue	79,398	84,255	83,674	86,377	97,059	96,250	89,597	72,148	71,309	68,619	65,017	59,074
Revenue Growth Rate	4.07%	0.694%	-3.13%	-11.01%	0.841%	7.42%	24.19%	1.18%	3.92%	5.54%	10.06%	5.07%
Net Income	5,260	6,779	6,957	7,726	6,437	8,442	5,835	4,281	2,314	3,447	3,091	2,546
Net Margin	6.41%	8.05%	8.31%	8.95%	6.63%	8.77%	6.51%	5.93%	3.25%	5.02%	4.75%	4.31%
Net Income Growth Rate	13.11%	-2.56%	-9.95%	20.02%	-23.75%	44.68%	36.3%	85%	-32.87%	11.52%	21.41%	-5.63%
Stockholders Equity	-2,884	-10,382	-14,231	-15,050	-14,254	-4,816	1,437	1,972	3,644	5,873	6,434	7,654
Equity Growth Rate	-38.62%	-27.05%	-5.44%	5.58%	196%	-435.1%	-27.13%	-45.88%	-37.95%	-8.72%	-15.94%	-23.21%
Return on Invested Capital (ROIC)	25.71%	23.15%	31.95%	32.6%	36.94%	36.16%	32.99%	19.96%	21.2%	18.29%	15.8%	13.72%
After-tax Operating Income	6,387	7,726	7,686	8,758	9,019	9,231	8,205	5,009	4,162	4,136	3,457	2,870
Income Tax Rate	29.65%	24.21%	23.99%	24.07%	28.76%	24.68%	24.6%	23.87%	31.82%	37.2%	40.53%	42.39%
Invested Capital	24,476	33,381	24,055	26,867	24,414	25,529	24,870	25,092	19,633	22,607	21,876	20,916