1. Devin Cumpston Dan Cawley Kevin Cox Jared Hanson

2. Economic Analysis Real GDP increased an estimated 3.5% from 2 nd quarter 2009 (www.bea.gov) Unemployment rose from 9.8% to 10.2% in October of 2009 (bls.gov) Existing home sales increased 9.4% in September of 2009 (www.realtor.com)www.realtor.com

3. Industry Analysis Lowe’s and Home Depot make up over 95% of the home improvement industry in terms of market capitalization Sensitive to recession Expansionary stage, nearing maturity

4. Liquidity 200820072006 LowesHome DepotLowesHome DepotLowesHome Depot Current Ratio1.15 1.121.151.271.39 Acid Test0.080.130.070.14.120.30 Inventory turnover4.014.24.284.184.465.04 Inventory turnover in days 90.9987.2685.3387.2681.8371.88

5. Accounting Policies Accounts Receivable Inventory

6. Sales in millions

7. Equity 200820072006 LowesHome DepotLowesHome DepotLowesHome Depot Dividend Payout22.48%67.16%15.59%37.97%9.05%24.19% Degree of Financial Leverage 1.081.231.041.111.031.04 Price/Earnings Ratio 12.116.3413.3311.8616.4813.91 Dividend Yield1.86%4.11%1.17%3.20%0.55%1.74% Market Price as of 11/18/2009 Lowes: $21.35 Home Depot: $27.18

8. Leverage 200820072006 LowesHome DepotLowesHome DepotLowesHome Depot Times-interest- earned 13.527.0124.2510.5133.4524.74 Debt/Equity Ratio0.811.320.921.500.771.09 Debt to Tangible Net Worth Ratio 0.811.140.921.510.771.12 Debt Ratio0.450.560.480.600.430.52

9. Cash Flows 200820072006 LowesHome DepotLowesHome DepotLowesHome Depot Operating cash flow/ total debt 28.17%23.64%29.43%21.52%37.39%28.13% Operating cash flow per share $2.80$3.28$2.98$3.09$2.95$3.72 Operating cash flow/cash dividends 8.403.6310.163.3516.315.49 Operating cash flow/current portion of long-term debt and current notes payable 4.043.133.942.8040.56425.61

10. Profitability Ratio200820072006 LowesHome DepotLowesHome DepotLowesHome Depot Net Profit Margin4.55%5.44%5.82%5.68%6.62%6.34% Total Assets Turnover 1.521.601.651.601.791.88 Return on Assets6.91%9.10%9.58%9.10%11.85%11.92% Return on Equity12.85%20.5617.65%20.56%20.69%22.18% Return on Common Equity 12.85%42.67%17.65%42.67%20.69%47.81% Gross Profit Margin 34.21%33.61%34.64%33.61%34.52%32.79% Operating Profit Margin 7.85%8.56%9.74%9.46%10.98%10.68%

11. Decision Home Depot Higher P/E ratio Better debt management More profitable Less volatile $25,000 / $27.31 per share = 914 shares 914 shares x $0.90 dividend = $822.67 per year

12. Questions?