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Lowe's Companies Inc. Message Board

  • drayousef drayousef Feb 27, 2003 9:23 PM Flag

    Debt Debt Debt Debt!!!!!!!!!!!!!!

    You know how much Lowes paid in 2002 in interest alone for all their debt? $241.762 MILLION!!!! Do you know how much HD paid? $35 million. Lowes's debt ratio is 46% which means that for every share of Lowes you buy you only get 54% of share holder equity, the rest is DEBT. When you buy HD, you get 93% share holder equity. Lowes may have had a good year, but they are in debt up to their eyeballs. Every year they acquire more and more debt to fuel their growth. The interest rates are going to stay this low for very long.

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    • When a company is in a great growth period, it accumulates more debt. When HD was enjoying more growth, their debt was up too. What does that tell you?

      Does everything have to be spelled out? Or are you just hoping to pump HD up to a decent price to sell it without too much loss?

    • I beleive they really thought the general management experience and the GE method could take them to another level. It might have worked better if he had surrounded himself with retail experts. However, he took a page out of Jack W.'s book and decided to build his own culture. What he didn't realize is the HD culture was one of his biggest assets. If they don't post some killer numbers in the first half of the year, don't look for him to be in control in the second half.

    • Look at WM and TGT over the past two years - both have performed fairly well and the stock fluctuations of both have been in lock step. Let's face it, when there are two players in an industry and one is twice the size of the other, the larger player's performance will have an impact on the smaller player's multiple. Notice I said multiple, not stock price. I wish I could tell you why Wall Street operates the way it does. If I could, then I wouldn't be in front of a computer screen on Saturday morning. I would suspect insiders in this company obtain stock in a variety of manners, rarely relying on open market purchases. As I said before, making predictions isn't my cup of tea. I am long on this stock beacuse I believe it has a super management team that understands retail, has strong growth potential with its existing business model for the next 4-5 years, has a strong infrastructure that gives it a competitive advantage, and has a long history of being a survivor. No predictions or comparisons, just my thoughts. Invest where you want. For me, a lot of $$$ go to LOW.

    • I'm enjoying the conversation. Regarding Nardelli, please keep him steering the ship. How did they figure a guy with NO retail experience would pan out. He's doing as expected, POORLY.... If all goes well, he'll have HD so far in a hole, they'll have to call back the old team.

    • I won't take a pot shot at you, that would be too easy. Let's tackle that stock thing for a minute. Seems to me that Lowe's stock was down 19.2% (not 15%) for the year. Contrasted to the S&P 500, which was down 23.2% and HD which was down 53.4%. So by comparison to others, not as bad, though still not good. As much as even the most ardent Lowe's supporter hates it, the market will only allow a certain percentage of seperation between Lowe's and HD (i.e. Lowe's multiple is somewhat controlled by HD). In other words, by stinking up the joint, HD has kept the Lowe's stock down. Wonder what a year from now will bring - guess what - everyone else does too. With uncertainty with regards to war and the overall economy I wouldn't even want guess. I will say this - if the uncertainty is lifted and the economy bounces back - Lowe's is in one helluva lot better shape to take advantage of it that HD. By the way read Lowe's guidance - that it what their executive management team thinks they will do. No one knows any better than them.

    • drayousef -- Re your cogent (albeit somewhat hysterical) post below.

      Thanks for some numbers!
      Yeah, Lowe's got debt. To put your $241 million in perspective, their interest/earnings is 18%. Now if their rate soared from 4+% to 10+%, then you start losing a couple of quarters' earnings just paying interest. But you gotta ask how fast all that debt rolls over. It's a weak point for Lowe's but we do have to be fair & look at the whole picture (imho).

      Subj: Debt Debt Debt Debt!!!!!!!!!!!!!!
      By: drayousef
      Date: 02/27/03 09:23 pm

      You know how much Lowes paid in 2002 in interest alone for all their debt? $241.762 MILLION!!!! Do you know how much HD paid? $35 million. Lowes's debt ratio is 46% which means that for every share of Lowes you buy you only get 54% of share holder equity, the rest is DEBT. When you buy HD, you get 93% share holder equity. Lowes may have had a good year, but they are in debt up to their eyeballs. Every year they acquire more and more debt to fuel their growth. The interest rates are going to stay this low for very long.

    • Then buy HD and get the hell off this message board. I'm tired of the HD investers on this board trying to convince us that they are right and about HD and we are wrong about LOW. Go over to the HD board and tell them about it.

    • i think i read somewhere that lowe's was finally financing new growth with cash flow. i may be wrong. can anyone confirm??

    • Scary with the economy and all, isnt LOWE a relatively new company?

 
LOW
54.09-0.06(-0.11%)Sep 19 4:06 PMEDT

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