- Price
- $195.17
- Fair value
- $255.00
- Discount
- 23.5%
- Uncertainty
- Medium
- LSEG rating
- 2.03
- Moat
- Wide
- Next earnings
- 2026-11-19
- Next earnings is estimate
- Yes
- Company name
- Lowe's
- Sector
- Home improvement retail
- About
- Lowe's is a large US home improvement retailer, with total sales of more than $86 billion in fiscal 2025. At July 31, 2026, it operated 1,761 stores with 196 million square feet of selling space. It sells building materials, tools, appliances, paint, plumbing, garden products and installation services to two groups of customers: do-it-yourself (DIY) homeowners and professional contractors (Pros). In 2025, it bought Artisan Design Group for $1.3 billion and Foundation Building Materials for $8.8 billion, two distributors that serve builders and large Pro customers. Lowe's makes money from the margin between what it pays suppliers and what it charges customers. Lowe's says that its sales depend on home sales, home prices and the age of US houses. Online sales grew 15.7% in Q2 2026.
- Thesis
- The market discounts Lowe's because high mortgage rates keep US home sales low, and fewer home sales mean fewer large DIY projects. The average 30-year mortgage rate reached 7.5% in late September 2026, its highest level since April 2024, and Lowe's stock fell 8.5% in September. In Q2 2026, comparable sales grew only 0.2%, and customer transactions fell 2.1%. Lowe's cut its 2026 outlook to flat comparable sales and sales of $92.0 billion. The 2025 purchases of Foundation Building Materials and Artisan Design Group added debt, so Lowe's uses its cash to repay debt, and it bought back few shares in 2026. For the gap to close, three things must be true. Comparable sales must turn clearly positive, with customer transactions that stop falling. The Pro business and the two acquired distributors must keep growing and raise profit. Debt must keep falling while Lowe's keeps its BBB+ and Baa1 ratings, so that buybacks can start again. The evidence comes with the Q3 2026 report, expected in about mid-November 2026, and the full-year report with the 2027 outlook in February 2027. Mortgage rates and home sales in the spring 2027 season are the main test. The gap can close only as the housing market recovers, probably over two to three years. If mortgage rates stay near 7.5%, the discount can last.
- Risks
- Sales depend on US home sales and home improvement spending. Mortgage rates reached 7.5% in September 2026, and many owners keep their low-rate mortgages and do not move. Customer transactions fell 2.1% in Q2 2026. If rates stay high, large DIY projects stay weak.
The 2025 purchases of Foundation Building Materials for $8.8 billion and Artisan Design Group for $1.3 billion added debt and integration work. Both businesses serve home builders, and new home construction is slowing. If they do not grow as planned, the return on the purchases falls.
Lowe's has a shareholders' deficit of $7.4 billion and about $37 billion of debt at July 31, 2026. It uses free cash flow to repay debt, so it has less cash for buybacks. A downgrade would raise its cost of debt.
Home Depot and other retailers and distributors compete for the same DIY and Pro customers. If competitors cut prices or win more Pro customers, Lowe's can lose sales and margin.
US tariff policy changes often. New tariffs can raise product costs, and the refunds of earlier tariffs are not certain in amount or timing.
- Balance sheet
- Cash: $3.4B
Debt: $37.2B
Net debt: $33.8B
EBITDA, last 12 months: $12.8B
Net debt / EBITDA: 2.6× (medium)
Interest cover: 7.9×
Undrawn credit line: $5.0B
Debt due within 12 months: $2.4B
Ratings: S&P BBB+ (stable outlook), Moody's Baa1 (stable outlook)
Lowe's funds itself with unsecured notes of the parent company and with cash from its stores. At July 31, 2026, debt was $35.2 billion of unsecured notes at carrying value and a $2.0 billion term loan due October 2028 at 4.648%. Debt excludes finance leases and $4.5 billion of operating lease liabilities. Cash includes $235 million of short-term investments. Debt due within 12 months is the current maturities of long-term debt. EBITDA is operating income plus depreciation and amortization for the 12 months to July 31, 2026. Interest cover is operating income divided by net interest expense for the first six months of fiscal 2026. Lowe's had $5.0 billion of undrawn revolving credit facilities, and no commercial paper was outstanding. Shareholders' equity is a deficit of $7.4 billion, because of past buybacks. In the first six months of fiscal 2026, Lowe's repaid $2.4 billion of notes, paid $1.3 billion of dividends and spent $366 million on share repurchases. It calls this progress toward its deleveraging commitment. The ratings are from the 10-Q, as of August 27, 2026.
As of 2026-07-31.
- Checkpoints
- Nov 19, 2026 (estimate): Q3 2026 results: comparable sales and transactions. Pending. Watch: Positive comparable sales with a smaller fall in customer transactions and no new cut to the 2026 outlook pass; negative comparable sales or another outlook cut fails.
Feb 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: A 2027 outlook with positive comparable sales and lower debt passes; an outlook of flat or negative comparable sales fails.
Q2 2027 (estimate): Spring 2027 season: housing and DIY demand. Pending. Watch: Lower mortgage rates and a rise in existing home sales in spring 2027 pass; mortgage rates near 7.5% with home sales still low fail.
- Recent events
- 2026-09-28: The average 30-year fixed mortgage rate reached 7.5%, for the first time since April 2024. Lowe's stock fell 8.5% in September 2026, and Home Depot's stock fell 11%.
2026-08-28: Lowe's appointed five executive vice presidents, effective September 1, 2026. They lead Pro and Home Services, Stores, Information and AI, Strategy and Business Development, and Marketing. Lowe's said that the changes give clearer accountability for its growth plans.
2026-08-19: Lowe's reported Q2 2026 results. Sales were $26.0 billion, up 8.3%, mostly from the acquired distributors. Comparable sales grew 0.2%, and customer transactions fell 2.1%. Adjusted EPS was $4.40, up 1.6%, including an $0.11 benefit from tariff refunds. Lowe's cut its 2026 outlook to sales of $92.0 billion, flat comparable sales and adjusted EPS of about $12.25.
2026-05-29: Lowe's raised its quarterly dividend by about 4% to $1.25 per share, from $1.20.
2026-05-20: Lowe's reported Q1 2026 results. Sales were $23.1 billion, and comparable sales grew 0.6%. Adjusted EPS was $3.03, up 3.8%. Lowe's kept its 2026 outlook of sales of $92.0 billion to $94.0 billion.
2026-04-20: US Customs started to accept refund requests for tariffs that the Supreme Court ruled unauthorized in February 2026. Lowe's recognized about $80 million of these refunds in Q2 2026, and the amount and timing of more refunds are not certain.