Lowe's Companies, Inc. (LOW) Intrinsic Value & DCF Valuation
Home Improvement · NYSE
Current Price
$215.68
Intrinsic Value
$222.23
+2.9% margin of safety
What Is Lowe's Companies, Inc.'s Intrinsic Value?
As of 2026-07-29, the base-case DCF model estimates the intrinsic value of Lowe's Companies, Inc. (LOW) at $222.23 per share, compared with a market price of $215.68, a margin of safety of +2.9%. The base case assumes 4.0% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $175.89 to $275.89. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Lowe's Companies, Inc. (LOW) Undervalued?
At $215.68, LOW trades about 2.9% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Brand Recognition and Scale
Lowe's benefits from strong brand recognition built over decades. Its vast store network and supply chain provide significant economies of scale.
↑Customer Loyalty and Services
Loyalty programs and specialized services like installation and design cater to both DIY and pro customers, fostering repeat business and higher spending.
↑Pro Customer Relationships
Lowe's actively cultivates relationships with professional contractors, offering dedicated support and credit, creating sticky relationships.
INVESTMENT RISKS
↓Housing Market Sensitivity
Lowe's performance is closely tied to the health of the housing market, including new construction and home renovation spending.
↓Inventory Management Challenges
Managing a vast inventory of diverse home improvement products is complex and subject to supply chain disruptions and obsolescence.
↓Competition from Big Box Retailers
Intense competition from other large retailers, including general merchandise stores with home goods sections, can erode market share.
Base case
LOW base case valuation
Intrinsic Value
$222.23
Margin of safety
+2.9%
Expected annual return
+0.6%
Base case assumptions: 4.0% annual growth, 10.0% discount rate, 16x exit multiple, 5 year projection. Data as of 2026-07-29.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the LOW valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Lowe's Companies, Inc. respond.
Open DCF Calculator for LOWCompany Overview
Lowe's Companies, Inc., together with its various subsidiary entities, operates as a prominent home improvement retailer serving both the United States and international markets. The company supplies a broad spectrum of items essential for construction, upkeep, renovations, and interior design projects. Its comprehensive product line encompasses major appliances, seasonal and outdoor living essentials, lawn and garden tools, timber, kitchen and bathroom fixtures, power tools, paints, custom millwork, general hardware, flooring options, plumbing components, building materials, decorative accents, lighting solutions, and electrical supplies. In addition to merchandise, Lowe's facilitates installation services through independent contractors across numerous product categories, offers extended protection plans, and provides repair services covering both warranty and post-warranty issues. The company markets its inventory, comprising both well-known national brands and proprietary private-label items, to a diverse clientele including individual homeowners, tenants, and trade professionals. As of January 28, 2022, Lowe's operated 1,971 retail locations dedicated to home improvement and hardware. Products are also accessible via its e-commerce platforms, Lowes.com and Lowesforpros.com, and through its mobile applications. Established in 1921, Lowe's Companies, Inc. maintains its headquarters in Mooresville, North Carolina.
Financial Metrics — LOW Stock Valuation Data
Revenue/Share (TTM)
$158.20
FCF/Share (TTM)
$13.63
ROIC (TTM)
21.2%
ROE (TTM)
-64.8%
P/FCF
15.9x
EV/EBITDA
13.4x
FCF Yield
6.30%
Debt/Equity
n/m
Based on trailing twelve-month data, LOW shows a free cash flow per share of $13.63 and a ROIC of 21.2%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 15.9x and FCF yield of 6.30% are important context metrics when evaluating LOW's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of LOW?
Lowe's Companies, Inc. currently generates $13.63 in free cash flow per share. At the current price of $215.68, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is LOW undervalued?
LOW trades at a P/FCF ratio of 15.9x with a free cash flow yield of 6.30%. This P/FCF is in a moderate range. However, whether LOW is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value LOW stock using DCF?
To perform a DCF valuation on Lowe's Companies, Inc.: (1) Start with the trailing free cash flow per share ($13.63) as the base, (2) project future FCF growth over 5-10 years based on Home Improvement industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting LOW's risk profile — with a debt-to-equity of -4.59x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to LOW?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Lowe's Companies, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Home Improvement trends, then discounting those amounts to today's dollars. LOW's ROIC of 21.2% reflects how efficiently the company converts invested capital into profit.
How does WACC affect LOW stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For LOW, with a debt-to-equity ratio of -4.59x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 13.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See LOW PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value LOW with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-07-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.