Lowe’s Companies, Inc. LOW has 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.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
Lowe's Companies, Inc. price-consensus-eps-surprise-chart | Lowe's Companies, Inc. Quote
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, which fared far better than our estimate of 0.5% increase 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%, which beat our estimate of 32.4% and slipped 70 basis points from 33.4% in the year-ago period.
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%, lagging our projection of 19.3%. 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%, marginally beating our estimate of 11%.
Lowe’s Cash Flow & Capital Returns Stay in Focus
This Zacks Rank #3 (Hold) 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.
As of May 1, 2026, Lowe’s operated 1,759 stores representing approximately 196 million square feet of retail selling space.
LOW Reaffirms Fiscal 2026 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.
Lowe’s Stock Price Performance
LOW shares have lost 8.6% year to date compared with the industry’s decline of 11.7%.
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Stocks Looking Red Hot
We have highlighted three better-ranked stocks, namely, FGI Industries Ltd. FGI, Williams-Sonoma, Inc. WSM and Alliance Laundry Holdings Inc. ALH.
FGI Industries is a supplier of kitchen and bath products. The company's product categories include sanitaryware, bath furniture, shower systems, customer kitchen cabinetry and other accessory items. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FGI Industries’ current financial-year earnings and sales indicates growth of 91.6% and 5.3%, respectively, from the year-ago actuals. FGI delivered a trailing four-quarter average earnings surprise of 151.7%.
Williams-Sonoma is a multi-channel specialty retailer of premium quality home products. It currently has a Zacks Rank of 2 (Buy). WSM delivered a trailing four-quarter earnings surprise of 6.7%, on average.
The Zacks Consensus Estimate for Williams-Sonoma’s current fiscal-year sales and earnings indicates growth of 4.4% and 4.8%, respectively, from the year-ago reported numbers.
Alliance Laundry is a provider of commercial laundry systems. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Alliance Laundry’s current financial-year earnings and sales suggests growth of 26.5% and 6.8%, respectively, from the year-ago actuals. ALH delivered a trailing four-quarter average earnings surprise of 20.6%.
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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).