LOW

We rate LOWES COMPANIES INC (LOW) as a Hold with a composite score of 55.8/100 at a current price of $279.00. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (90th percentile) and momentum (70th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (25th percentile) and quality (43th percentile) tempers our overall conviction. We assign a No Moat rating (31/100), Low uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

LOWES COMPANIES INC holds a top-quartile position (#0 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 55.8/100 places it at rank #1171 in our full 7,333-stock universe. With a $133.5B market capitalization, LOWES COMPANIES INC operates at meaningful scale within the Retail Trade sector, providing competitive advantages in distribution, procurement, and customer reach.

Despite positive momentum (70th percentile), revenue contraction of -1% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 34% (-2.3pp vs sector) narrow to operating margins of 13% (+8.6pp vs sector) and net margins of 8.3%, yielding a gross-to-net conversion rate of 25%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $279.00, LOWES COMPANIES INC is trading near fair value based on current fundamentals. Our value factor score of 50/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 21.6x (roughly in line with the sector median of 21.4x), EV/EBITDA of 14.9x (at a premium), P/S of 1.8x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to LOWES COMPANIES INC. The company exhibits strong financial stability with a beta of 0.62, and a stability factor in the 90th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.62 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 90th percentile and quality factor at the 43th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (90th percentile) suggests predictable business dynamics; large-cap scale ($133.5B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate LOWES COMPANIES INC's capital allocation as Poor. Key concerns include low returns on equity (-61.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — LOWES COMPANIES INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, LOWES COMPANIES INC receives a Hold rating with a composite score of 55.8/100 (rank #1171 of 7,333). Our quantitative framework assigns a No Moat (31/100, trend: stable), Low uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 56/100.

Our analysis supports a neutral stance on LOWES COMPANIES INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.