Review of Financial Research Report: This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment. The report is due in Week 10, in needs to be at least 5 pages, and it needs to cover the following topics: Company Overview: Conduct research and describe the company, its operations, locations, markets, and lines of business. Collect financial statements for the past three years, fiscal or calendar. Ratio analysis: Perform trend and ratio analysis on current and fixed assets, current and long term liabilities, owner’s equity, sales revenues, EBIT, net income, and earnings per share. Project these trends for three years. Stock price analysis: Research the company’s common stock price for the past five years. Research the Standard & Poor’s Stock Market Index (S&P 500) for the past five years. Chart the price movement in the company’s common stock against the S&P price movement. State and support your opinion on the company’s common stock as an investment opportunity. References: Use at least five references and follow APA format when preparing the report.
Lowe's Companies, Inc., is the second-largest home improvement retailer in the United States (trailing Home Depot Inc.), holding about six percent of the $140 billion home improvement market. No longer a low-profile company, Lowe's evolved from a regional hardware store operator into a nationwide chain of home improvement superstores bent on international expansion. “The #2 US home improvement chain (after The Home Depot), Lowe's has about 1,700 superstores in 50 states and more than 15 locations in Canada and Mexico, as well as an e-commerce site” (Lowe’s Companies, Inc, 2011, para 1). Lowe’s is also the seventh largest retailer in the U.S. With fiscal year 2009 sales of $47.2 billion, Lowe's Companies serves approximately 15 million customers a week and their current stock price (as of 3/11/11) is $26.94 (Investor Relations, 2010). The market capitalization is $37.18 billion. Its stores sell some 40,000 products for do-it-yourselfers and professionals for home improvement and repair projects. Lowe’s carries product such as lumber, paint, plumbing and electrical supplies, tools, and gardening products, as well as appliances, lighting, and furniture. The Lowe’s Companies, Inc is ranked number 42 among other Fortune 500 companies. According to “Lowe’s Reports Fourth Quarter Sales and Earnings Results” (2011), Lowe’s reported net earnings of $285 million for the quarter ended January 28, 2011, a 39% increase from the same period a year ago. Diluted earnings per share increased 50% to $0.21 from $0.14 in the fourth quarter of 2009. For the fiscal year ended January 28, 2011, net earnings increased 12.7% to $2 billion and diluted earnings per share increased 17.4% to $1.42. Sales for the quarter increased 3.1% to $10.5 billion, up from $10.2 billion in the fourth quarter of 2009. For the fiscal year ended January 28, 2011, sales increased 3.4% to $48.8 billion. Comparable store sales increased 1.1% for the fourth quarter and increased 1.3% for fiscal 2010 (para 1-2).
Below are some figures from Lowe’s Balance Sheets and Income Statements from 2009, 2010, and 2011. These figures were obtained from the Hoover’s Company Profile. in millions of $, except EPS| Jan-11| Jan-10| Jan-09|
Current Assets| 9,967| 9,732| 9,251|
Fixed Assets| 22,089| 22,499| 22,722|
Total Assets| 33,699| 33,005| 32,686|
Current Liabilities| 7,119| 7,355| 8,022|
Long-term Liabilities| 6,537| 4,528| 5,039|
Owner's Equity| 18,112| 19,069| 18,055|
Revenue| 48,815| 47,220| 48,230|
EBIT| 3,228| 2,825| 3,506|
Net Income| 2,010| 1,783| 2,195|
EPS| 1.42| 1.21| 1.49|
Financial ratios are useful indicators of a firm’s performance and financial situation. Most ratios can be...