Lowe's

Methodology

Lowe's earnings exhibit cyclicality tied to housing markets and consumer spending, requiring normalization to mid-cycle levels for meaningful analysis. The company's DIY and Pro customer mix creates more stability than pure new construction exposure. Use average earnings across multiple years rather than peak housing cycle figures for reliable fair value estimates.

Methodology

Lowe's PEG ratio can appear misleadingly attractive during housing booms when near-term growth accelerates, or expensive during downturns despite eventual recovery potential. The metric works best when comparing to Home Depot and historical ranges while adjusting for housing cycle positioning. Operational improvement initiatives can justify premium valuations independent of cyclical factors.

Methodology

Lowe's offers a meaningful dividend that management has consistently grown, with PEGY providing better visibility into total shareholder returns. The dividend adds stability during housing market volatility while buybacks supplement capital returns. Total return focus matters more than isolated growth metrics for this mature retailer.