Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Lowe's Companies, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -2.7% to 3.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 5, DPO 59, DIO 105). At a 8.9% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $426.15 per share, suggesting LOW is undervalued by 80.8% at the current price of $235.68.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 9,752 | 10,833 | 11,220 | 11,698 | 12,062 | 12,364 |
| (−) Net Interest | 1,202 | 1,335 | 1,382 | 1,441 | 1,486 | 1,523 |
| (+) D&A | 1,957 | 1,954 | 1,997 | 2,027 | 2,083 | 2,135 |
| EBITDA | 12,911 | 14,122 | 14,600 | 15,166 | 15,632 | 16,023 |
| (−) Tax | 2,446 | 2,718 | 2,815 | 2,934 | 3,026 | — |
| (−) CapEx | 1,839 | 2,043 | 2,116 | 2,206 | 2,275 | — |
| (−) ΔWC | -264 | 927 | 332 | 409 | 313 | — |
| Free Cash Flow (FCF) | 8,889 | 8,435 | 9,337 | 9,617 | 10,018 | — |
| Peers' EBITDA Multiple | 19.8x | |||||
| Terminal Value | 316,927 | |||||
| WACC / Discount Rate | 8.86% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 8,520 | 7,427 | 7,552 | 7,145 | 6,838 | 207,337 |
| Enterprise Value | 244,819 | |||||
| Projection Period | 37,482 | 15.3% | ||||
| Terminal Value | 207,337 | 84.7% | ||||
| (−) Current Net Debt | 6,205 | |||||
| Equity Value | 238,614 | |||||
| (÷) Outstanding Shares | 560M | |||||
| Fair Price | $426 | +80.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.8x | 17.8x | 19.8x | 21.8x | 23.8x |
|---|---|---|---|---|---|
| 6.9% | $383 | $424 | $465 | $506 | $547 |
| 7.9% | $367 | $406 | $445 | $484 | $524 |
| 8.9% | $351 | $389 | $426 | $464 | $501 |
| 9.9% | $337 | $372 | $408 | $444 | $480 |
| 10.9% | $323 | $357 | $391 | $425 | $459 |
Current price: $235.68. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.