It has been about a month since the last earnings report for Lowe's (LOW). Shares have added about 2.2% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Lowe's due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Lowe's Companies, Inc. before we dive into how investors and analysts have reacted as of late.
Lowe’s Q1 Earnings Beat on Pro Momentum & Strong Spring Execution
Lowe’s reported first-quarter fiscal 2026 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate. The home improvement retailer delivered another quarter of positive comparable sales growth, driven by strong spring execution, continued momentum in the Pro and online businesses, and solid demand across appliances and home services.
Management has highlighted that Lowe’s Total Home strategy continues to resonate with both Pro and DIY customers despite a challenging housing backdrop. The company has also reaffirmed its fiscal 2026 outlook, reflecting confidence in strategic initiatives, productivity improvements and ongoing market-share gains.
LOW’s Quarterly Performance: Key Metrics & Insights
Adjusted earnings were $3.03 per share, rising 3.8% year over year and beating the Zacks Consensus Estimate of $2.96 by 2.4%. On a reported basis, earnings per share came in at $2.90 compared with earnings of $2.92 in the prior-year quarter. Results included $96 million in pre-tax expenses tied to the acquisitions of Foundation Building Materials and Artisan Design Group.
Net sales came in at $23.1 billion, rallying 10.3% from the year-ago quarter and surpassing the consensus mark of $22.9 billion by 0.6%. The upside was fueled by a 0.6% increase in comparable sales and was supported by strong spring demand, continued strength in Pro sales and a robust 15.5% increase in online sales. Appliances and home services also remained key growth contributors during the quarter.
Lowe’s Sees Margin Pressure Despite Higher Sales
Gross profit increased 8% to $7.54 billion from $6.99 billion in the prior-year quarter. The gross margin for the quarter was 32.7%.
Selling, general and administrative expenses increased 9.3% to $4.42 billion from $4.05 billion in the prior-year period. However, SG&A expenses, as a percentage of sales, improved 10 basis points year over year to 19.2%. Depreciation and amortization expenses rose to $566 million from $446 million a year ago.
Consequently, operating income increased 2.4% to $2.55 billion from $2.49 billion in the prior-year quarter. However, the operating margin contracted 80 basis points year over year to 11.1%.
Lowe’s Cash Flow & Capital Returns Stay in Focus
The company ended the quarter with cash and cash equivalents of $786 million compared with $3.05 billion in the year-ago period. Long-term debt, excluding current maturities, was $36.75 billion. Merchandise inventory stood at $18.5 billion.
Net cash provided by operating activities totaled $3.35 billion during the quarter compared with $3.38 billion in the prior-year period. Capital expenditure was $521 million. During the quarter, Lowe’s paid out $674 million in dividends and repurchased $363 million worth of common stock.
LOW Reaffirms FY26 Outlook
Lowe’s reaffirmed its fiscal 2026 guidance and expects total sales between $92 billion and $94 billion, indicating year-over-year growth of 7-9%. Comparable sales are anticipated to be flat to up 2%.
The company projects the operating margin between 11.2% and 11.4%, while the adjusted operating margin is expected to be 11.6-11.8%. Lowe’s expects earnings per share of $11.75-$12.25 and adjusted earnings per share of $12.25-$12.75. Capital expenditure is expected to rise to $2.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Lowe's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Lowe's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Lowe's belongs to the Zacks Retail - Home Furnishings industry. Another stock from the same industry, Home Depot (HD), has gained 6.5% over the past month. More than a month has passed since the company reported results for the quarter ended April 2026.
Home Depot reported revenues of $41.77 billion in the last reported quarter, representing a year-over-year change of +4.8%. EPS of $3.43 for the same period compares with $3.56 a year ago.
For the current quarter, Home Depot is expected to post earnings of $4.71 per share, indicating a change of +0.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
Home Depot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Lowe's Companies, Inc. (LOW): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).