Lowe’s Earnings: Growth From Tie-Ups as Core Business Proceeds Steadily

Key Morningstar Metrics for Lowe’s Companies

• Fair Value Estimate
  : $250.00
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Lowe’s Companies’ Earnings

Lowe’s Companies’ LOW first quarter included sales growth of 10.3%, supported by the inclusion of recent pro acquisitions and same-store sales growth of 0.6%, leading to adjusted earnings per share of $3.03. Comp ticket rose 1.5% on price and pro demand, while transactions fell 0.9% due to do-it-yourself pressure.

Why it matters: Like wide-moat peer Home Depot, Lowe’s said that despite housing affordability pressure, it is still taking share. With most of the top-line growth stemming from the Artisan Design Group and Foundation Building Materials acquisitions, Lowe’s has been aided by its inroads into the pro community.

• Even with tepid same-store sales, Lowe’s is controlling costs well. Adjusted operating margin of 11.5% was 30 basis points better than our forecast and down 40 basis points, which we see largely as a function of the inclusion of pro tie-ups rather than retail concern.
• This mix shift, along with brand investments (Mylow assistant, pet and workwear expansions, innovation), will pressure operating margin in 2026. However, these factors should benefit the overall customer experience and productivity over time, ultimately expanding returns on invested capital.

The bottom line: Shares trade more than 10% below our $250 fair value estimate for wide-moat Lowe’s. We think shares have struggled in 2026 (down 12%) as investors remain concerned that consumer spending hesitancy could last longer than expected.

• Lowe’s held intact its full-year outlook for total sales growth of 7%-9%, same-store sales growth of 0%-2%, and adjusted EPS of $12.25-$12.75. Our prerelease forecast for sales growth of 7%, same-store sales growth of 0.8%, and adjusted EPS of $12.56 will be nudged up incrementally.
• We plan to raise our intrinsic value by a low-single-digit rate to account for first-quarter results and time value. Still, we maintain our long-term forecast for sales growth of 4%, same-store sales growth of 3%, and adjusted operating margin expanding to nearly 14% (from 12% in 2025).