LOW
Lowe's Companies Inc
Price:  
228.39 
USD
Volume:  
2,300,995.00
United States | Specialty Retail
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

Lowe's WACC - Weighted Average Cost of Capital

The WACC of Lowe's Companies Inc (LOW) is 7.0%.

The Cost of Equity of Lowe's Companies Inc (LOW) is 7.90%.
The Cost of Debt of Lowe's Companies Inc (LOW) is 5.00%.

Range Selected
Cost of equity 6.60% - 9.20% 7.90%
Tax rate 24.40% - 24.60% 24.50%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.0% - 8.0% 7.0%
WACC

Lowe's WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.59 0.77
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 9.20%
Tax rate 24.40% 24.60%
Debt/Equity ratio 0.28 0.28
Cost of debt 5.00% 5.00%
After-tax WACC 6.0% 8.0%
Selected WACC 7.0%

Lowe's's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for Lowe's:

cost_of_equity (7.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.59) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.