Lowe’s Companies, Inc.

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker	Analyst	Analyst Email
Oppenheimer	Brian Nagel	brian.nagel@opco.com
Raymond James	Budd Bugatch	budd.bugatch@raymondjames.com
Jefferies	Daniel Binder	dbinder@jefferies.com
Consumer Edge Research	David A. Schick	dschick@consumeredgeresearch.com
Longbow Research	David S. MacGregor	dmacgregor@longbowresearch.com
Evercore ISI	Greg Melich	greg.melich@evercoreisi.com
Nomura Research	Jessica A. Schoen	jessica.schoen@nomura.com
Telsey Advisory Group	Joseph Feldman	jfeldman@telseygroup.com
SunTrust Robinson Humphrey	Keith Hughes	keith.hughes@suntrust.com
Deutsche Bank Research	Mike Baker	michael.baker@db.com
Piper Jaffray	Peter J. Keith	peter.j.keith@pjc.com
Atlantic Equities	Sam Hudson	s.hudson@atlantic-equities.com
RBC Capital Markets	Scot Ciccarelli	scot.ciccarelli@rbccm.com
Wolfe Research	Scott Mushkin	smushkin@wolferesearch.com
Wedbush Securities	Seth Basham	seth.basham@wedbush.com
BMO Capital Markets	Wayne Hood	wayne.hood@bmo.com

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Primary Input Data

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Derived Input Data

Derived Input	Label	2015 Value	2016 Value	Equational Form
Net Operating Profit Less Adjusted Taxes	NOPLAT	3,133	3,570	$NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)$
Free Cash Flow	FCF	3,609	4,411	$FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS$
Tax Shield	TS	194	107	$TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income$
Invested Capital	IC	23,079	22,535	$IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital$
Return on Invested Capital	ROIC	13.58%	15.84%	$ROIC\,=\,\frac { NOPLAT }{ IC }$
Net Investment	NetInv	1,936	1,044	$NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation$
Investment Rate	IR	61.80%	29.23%	$IR\,=\,\frac {NetInv}{NOPLAT}$
Weighted Average Cost of Capital	WACC_Market	23.98%	22.45%	$WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)$
Weighted Average Cost of Capital	WACC_Book	7.31%	7.62%
Enterprise value	EV_Market	77,699	78,067	$EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash$
Enterprise value	EV_Book	75,956	77,063
Long-Run Growth	g = IR x ROIC	8.39%	4.63%	Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
Long-Run Growth	g = % $\Delta$ GDP	2.50%	2.50%
Margin from Operations	M	8.57%	8.56%	$M\,\,=\,\,\frac{EBIT}{SALES}$
Depreciation/Amortization Rate	D	24.76%	22.43%	$D\,\,=\,\,\frac{D+A}{EBITDA}$

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form	Observed Value		Single-stage multiple g solution		Two-stage valuation model g solution
Equational Form	12/31/2015	12/31/2016	12/31/2015	12/31/2016	12/31/2015	12/31/2016
EV/SALES $\frac {EV}{Sales} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)$	1.38	1.22	28.38%	25.13%	25.41%	23.22%
EV/EBITDA $\frac {EV}{EBITDA} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)$	12.13	11.02	28.38%	25.13%	25.41%	23.22%
EV/NOPLAT $\frac {EV}{NOPLAT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}$	24.80	21.86	28.38%	25.13%	25.41%	23.22%
EV/FCF_OPS $\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	21.53	17.70	28.38%	25.13%	25.41%	23.22%
EV/EBIT $\frac {EV}{EBIT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	16.12	14.21	28.38%	25.13%	25.41%	23.22%
EV/IC $\frac {EV}{IC} \,= \,\frac{ROIC\, -\, g}{WACC\,-\,g}$	3.37	3.36	28.38%	25.13%	25.41%	23.22%

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