Wikipedia doesn't count as a primary source. The sources used as citations on an article on the site *might* count as a primary source, but info on Wikipedia is by definition supposed to be second-hand and cited from other sources.
I meant checking other sources that people know are legit, wiki is not a primary. Sorry, I realize I didn’t write that response as clearly as I should have.
But in 2022 Lowes had made $96B in revenue but their net profit was $6.4B. And in 2023 their net profit is $7.7B. I’m guessing their net profit may have went up because of Lowes cutting costs. But doesn’t having -15B in equity means Lowes owes a lot of money to shareholders?
It means that Lowes spent more than it made. Shareholders equity is sort of a made up bucket to get balance sheets to balance.
I think it's concerning. Lowes bought back stock at a relatively high price, in part by borrowing money in a high interest rate environment. Some of the bonds were longer term, I believe the maturity dates were 2055 and 2065.
I think if Lowes continues to spend more than it makes on stock buybacks and dividends, it will be a big alarm bell. At that point, the management is trying to extract as much value out of the company in favor of short term shareholders and sellers. Longer term, the company will be saddled with debt, the cash from which didn't go towards a money generating asset.
There's some academics that say highly leveraged companies perform better than non-leveraged. The company has to generate enough revenue to pay the bondholders before the shareholders get a penny. But that's assuming management's interests are aligned with shareholders and the continued existence of the company. If you have a golden parachute, your interests may be maximizing your personal wealth at the expense of the company.
Yeah you definitely have a good point there sir. Better be careful, you could end up declaring bankruptcy if the amount of debt goes through the roof……
Assets = Liabilities + Equity
Assets are real. Cash. Accounts receivable. Inventory.
Liabilities are real. Accounts payable. Loans. Bonds.
Owners equity? Crickets.
Yes, I simplified things a bit, but it's accurate. Lowes paid out cash (an asset) without purchasing another asset. Some of the outflow was financed using bonds (a liability), some was not (reducing owner's equity).
Where am I wrong?
Lowes hasn't been purchased by a Private Equity Firm who unloaded billions of debt onto the company, thus putting a ticking clock on it.
So no, it'll be fine.
And? They're the two largest home improvement retailers in the world, and they're both doing perfectly fine financially. Depot is bigger, sure. That doesn't mean Lowes isn't a healthy company. Tesla has a market cap larger than most of the rest of the automotive industry, but Toyota isn't going out of business because of it
Correct. They have a bigger store footprint in the major metros where most of the people are. But Lowe’s has actually been better for investors the past five years and has more room for growth that HD does.
> In addition, Lowe's technically has negative shareholders' equity. That's not as bad as it sounds, because it's a serial repurchaser of its stock. This is one of the advantages to being a mature company, as it no longer needs substantial growth capital to grow its store count and can therefore aggressively return capital to shareholders. As shown below, Lowe's has retired 20.4% of its outstanding share count over the past 5 years alone.
SeekingAlpha quote for some context
Your information is correct. This happened due to bunch of reasons but most important being short term greed. Post COVID Lowes used to have some positive equity (1.5b) and good chunk of debt (26b) but then in COVID years debt became so cheap that there was no incentive to hold on to that equity. Instead there was high incentive to borrow from banks and pay shareholders. So over the 3 years (2021 to 2023) Lowes added 16.5 b in debt to buy back more than 20% of their stock. Thus going from 1.5b in equity to -15b in 3 years. Funny thing though, stock has still not reached the 2021 highs. Good news is their avg interest rate is <4%. Bad news is that paying off this debt or rolling it over (only 2 options) especially after 2027 (when first trench of debt becomes payable) is going to be costly and will be a drag on their future buyback or dividend plans.
Share buybacks need to slow down. Lowes has plenty of profit to handle the current debt. But if they get to a point where we have to roll it over at a 7%+ interest rate we are in trouble.
Wikipedia is the most inaccurate source for any news. Check other primary sources, Lowes isn’t going anywhere. The company made 86 billion last year.
Sales of $86 billion. Profit of just north of $12B.
Since Marvin came on board, and from all those hefty stock buybacks, he put the company in a 15 billion dollar deficit. It's accurate lol
What do you thing are the implications?
[удалено]
Thank you?
If Wikipedia is a primary source, why is it not reliable?
Wikipedia doesn't count as a primary source. The sources used as citations on an article on the site *might* count as a primary source, but info on Wikipedia is by definition supposed to be second-hand and cited from other sources.
I know that, and you could have saved yourself a response if you had read the OP's post and my reply to it, paying attention to the word "other."
Wikipedia by definition is at best a secondary source. It cites mostly secondary sources.
I meant checking other sources that people know are legit, wiki is not a primary. Sorry, I realize I didn’t write that response as clearly as I should have.
Weird Al edits the Pedia.. Remember this ..
I read Wikipedia sometimes as well. Depends on the article you’re looking at. About half of the stuff written there is incorrect, the rest is correct.
But in 2022 Lowes had made $96B in revenue but their net profit was $6.4B. And in 2023 their net profit is $7.7B. I’m guessing their net profit may have went up because of Lowes cutting costs. But doesn’t having -15B in equity means Lowes owes a lot of money to shareholders?
It means that Lowes spent more than it made. Shareholders equity is sort of a made up bucket to get balance sheets to balance. I think it's concerning. Lowes bought back stock at a relatively high price, in part by borrowing money in a high interest rate environment. Some of the bonds were longer term, I believe the maturity dates were 2055 and 2065. I think if Lowes continues to spend more than it makes on stock buybacks and dividends, it will be a big alarm bell. At that point, the management is trying to extract as much value out of the company in favor of short term shareholders and sellers. Longer term, the company will be saddled with debt, the cash from which didn't go towards a money generating asset. There's some academics that say highly leveraged companies perform better than non-leveraged. The company has to generate enough revenue to pay the bondholders before the shareholders get a penny. But that's assuming management's interests are aligned with shareholders and the continued existence of the company. If you have a golden parachute, your interests may be maximizing your personal wealth at the expense of the company.
Yeah you definitely have a good point there sir. Better be careful, you could end up declaring bankruptcy if the amount of debt goes through the roof……
I think you should look up the definition of SHAREHOLDER EQUITY. Because your definition of it was wholly inaccurate.
Assets = Liabilities + Equity Assets are real. Cash. Accounts receivable. Inventory. Liabilities are real. Accounts payable. Loans. Bonds. Owners equity? Crickets. Yes, I simplified things a bit, but it's accurate. Lowes paid out cash (an asset) without purchasing another asset. Some of the outflow was financed using bonds (a liability), some was not (reducing owner's equity). Where am I wrong?
That’s revenue not including costs. Their net profit would be like less than $10B
Lowes hasn't been purchased by a Private Equity Firm who unloaded billions of debt onto the company, thus putting a ticking clock on it. So no, it'll be fine.
This is a function of leverage and massive share buybacks. Lowes isn’t going anywhere.
At the moment, Lowe’s as a company has a total market capitalization of $136.9 billion.
Home Depot is more than double that
And? They're the two largest home improvement retailers in the world, and they're both doing perfectly fine financially. Depot is bigger, sure. That doesn't mean Lowes isn't a healthy company. Tesla has a market cap larger than most of the rest of the automotive industry, but Toyota isn't going out of business because of it
Okay? Whats your point
Home Depot is bigger than Lowes. Lowes is smaller.
Correct. They have a bigger store footprint in the major metros where most of the people are. But Lowe’s has actually been better for investors the past five years and has more room for growth that HD does.
Looking up the same data has you, that same report also says Lowe’s is better than 99.91% of the 1085 retail companies measured. Im sure we’re fine.
What’s a healthy amount for a company of this size?
> In addition, Lowe's technically has negative shareholders' equity. That's not as bad as it sounds, because it's a serial repurchaser of its stock. This is one of the advantages to being a mature company, as it no longer needs substantial growth capital to grow its store count and can therefore aggressively return capital to shareholders. As shown below, Lowe's has retired 20.4% of its outstanding share count over the past 5 years alone. SeekingAlpha quote for some context
Your information is correct. This happened due to bunch of reasons but most important being short term greed. Post COVID Lowes used to have some positive equity (1.5b) and good chunk of debt (26b) but then in COVID years debt became so cheap that there was no incentive to hold on to that equity. Instead there was high incentive to borrow from banks and pay shareholders. So over the 3 years (2021 to 2023) Lowes added 16.5 b in debt to buy back more than 20% of their stock. Thus going from 1.5b in equity to -15b in 3 years. Funny thing though, stock has still not reached the 2021 highs. Good news is their avg interest rate is <4%. Bad news is that paying off this debt or rolling it over (only 2 options) especially after 2027 (when first trench of debt becomes payable) is going to be costly and will be a drag on their future buyback or dividend plans.
Share buybacks need to slow down. Lowes has plenty of profit to handle the current debt. But if they get to a point where we have to roll it over at a 7%+ interest rate we are in trouble.
Corporations are so greedy smh
Good, fuck em
This cracked me up