Lowe's Companies, Inc.

LOW · NYSE · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

Lowe's is grinding out small sales gains in what management calls the toughest DIY market since the financial crisis, while buying growth from home builders that costs profit today and only pays off if housing recovers. How much of this year's sales growth came from the acquisitions?

  • The headline sales growth is bought, not earned.

    Second-quarter revenue rose 8.3%, but comparable sales grew just 0.2%, so nearly all of it came from the two builder-supply acquisitions. The DIY shopper, who drives most of the business, still has not come back.

  • Management cut the year to the bottom of its own range.

    In August Lowe's reset the year to roughly flat comparable sales and adjusted earnings near $12.25, the low end of its February range, and said the second half should look like the first. Any recovery is upside it is not counting on. What did management take out of the second-half outlook between May and August?

  • The acquisitions cost margin before they earn it.

    FBM and ADG add roughly $8 billion of sales but take about half a point off operating margin each year, and new-home construction is at multiyear lows, so both are under pressure. Lowe's is paying for a recovery that has not started. What would it take for the acquired businesses to stop dragging on profit?

Bullish
  • Contractor and online share gains
    The bull case is that Lowe's keeps taking share with contractors, online and installed services, so it can grow even while the home improvement market is flat.
  • Productivity offsets cost inflation
    Management has shown it can protect profit through productivity work, which lets it absorb freight and wage inflation without giving up the investments that drive sales.
  • Cash generation funds investment
    Strong cash generation and a plan to pay down acquisition debt support the dividend and leave room to keep investing through a slow housing market.
Bearish
  • Deferred do-it-yourself projects
    The bear case is that cautious homeowners keep deferring large do-it-yourself projects, and that slice of the business is large enough to hold total sales growth near flat.
  • Dilution and freight costs
    Profit is being squeezed from two directions at once, as acquired distribution businesses dilute gross margin and freight and fuel costs are expected to stay elevated.
  • Guidance moved to low end
    Management has stopped assuming any second-half recovery, so the share-gain story now depends entirely on Lowe's own initiatives rather than a better housing market.
See the full bull & bear case
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Sale≥$50KAug 28Oct 8
Donald Trump
Republican · Executive
Purchase≥$500KAug 21Oct 8
Donald Trump
Republican · Executive
Purchase≥$15KAug 17Oct 8
Donald Trump
Republican · Executive
Purchase≥$1KAug 10Oct 8
Donald Trump
Republican · Executive
Purchase≥$15KJul 27Sep 22

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Product segmentsGeography
FY2025 · USD

How Lowe's Companies turned $86.3B of revenue into $10.2B of operating income.

Revenue
Home Decor$31.5B▲ 2.15% YoY
Building Products$26.5B▲ 0.58% YoY
Hardlines$24.2B▼ 0.29% YoY
Other Sales$1.8B▼ 15.76% YoY
Total revenue$86.3B
Gross profit$28.9B33.5%
Operating income$10.2B11.8%
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