Is Lowe's Companies Inc (LOW) overvalued?
On Equity Rank's model estimate, LOW trades close to its fair value (4% above it). Lowe's Companies Inc (LOW) last closed at $224.55; the multi-method model fair value is $215.90.
| Price | Model fair value | Price vs model |
|---|---|---|
| $224.55 | $215.90 | 4% above |
What the answer rests on
- 4 of 7 valuation methods put LOW's value above its price and 3 put it below, so the methods disagree.
- To justify today's price, LOW's free cash flow would need to grow about 2.1% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 4.2% a year.
- LOW trades at 19.4 times its last year's earnings, against a median of 19.3 for 72 profitable Consumer Discretionary companies.
- Over the past year the price sat below the model fair value on 89% of trading days. The gap ranged from 25% below to 11% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind LOW's fair value · What prices assume · Other companies