Lowe's Slips as Company Offers Mixed Guidance Despite Double-Beat Report

Lowe’s reported its fiscal fourth-quarter results this morning, posting beats on both the top and bottom lines that highlighted the effectiveness of its Total Home strategy in a pressured housing environment.

Total sales reached $20.6 billion, up 11% year-over-year, exceeding the Zacks Consensus Estimate of $20.36 billion. Adjusted EPS came in at $1.98, up 2.6% from the prior-year quarter and surpassing expectations of $1.95, even after absorbing $149 million in pre-tax acquisition-related expenses. This performance capped a year of consistent Pro momentum and digital gains, with the company returning $2.6 billion to shareholders through dividends and buybacks.

Comparable sales rose 1.3%, driven by strength in the Pro segment, online sales, and home services, along with solid holiday performance. Management noted that underlying trends remained healthy when adjusting for weather impacts, with customer engagement across both Pro and DIY channels supporting the results. CEO Marvin Ellison highlighted how the Total Home approach is resonating, enabling Lowe’s to take share regardless of the macro backdrop.

Mixed Guidance Leads to Underwhelming Earnings Reaction

The company issued mixed forward guidance for the upcoming fiscal year, projecting total sales of $92–$94 billion (up 7–9% year-over-year), comparable sales flat to +2%, and adjusted diluted EPS of $12.25–$12.75. Operating margin is expected to expand to 11.6%–11.8%. Capital expenditures are planned at approximately $2.5 billion, focused on Pro enhancements, supply chain, and digital capabilities.

These results signal positive momentum for Lowe’s LOW going forward. Its focus on the Pro customer, successful integration of recent acquisitions like Foundation Building Materials, and investments in digital and services position the company to capture share as the housing market stabilizes. Overall, the quarter reinforces Lowe’s resilience and sets a constructive tone as rates moderate amid a gradual recovery.

Despite the solid beat, shares traded down roughly 2% in early trading on Wednesday, likely reflecting the relatively cautious comparable-sales outlook and the impact of one-time acquisition costs. Investors appear to have focused on the tempered near-term view rather than the operational strength and full-year revenue guidance.

Home Depot Gains After Posting Double-Beat Report

Home Depot reported its own fourth-quarter results yesterday, delivering beats on both revenue and earnings despite a tough comparable period and ongoing housing softness. The stock rose solidly before giving some gains back on Wednesday.

The company posted sales of $38.2 billion (a 3.8% decline due to the extra week in the prior-year quarter), surpassing consensus estimates of approximately $38.18 billion. Adjusted EPS came in at $2.72 (which translated to an 8% surprise), beating our $2.52 forecast and reflecting solid execution amid consumer caution. This performance capped a year of market share gains and stable underlying demand, with the Zacks Rank #3 (Hold) reflecting continued confidence in the company's long-term positioning.

Comparable sales were a bright spot, rising 0.4% overall and 0.3% in the U.S., better than many anticipated amid persistent housing market pressures. The Pro segment continued to provide resilience as contractors and builders drove steady activity in repair and maintenance categories, offsetting some DIY weakness.

Management highlighted customer engagement and operational improvements, noting that underlying demand remained relatively stable when adjusting for weather and calendar effects.

The company provided constructive fiscal 2026 guidance, projecting total sales growth of 2.5% to 4.5%, comparable sales ranging from flat to +2.0%, and adjusted EPS growth from flat to +4% (from $14.69 in FY2025). This outlook reflects cautious optimism for a steady recovery in home improvement spending, supported by an aging housing stock and equity-rich homeowners prioritizing upgrades over moves.

Home Depot HD also announced a 1.3% increase in its quarterly dividend to $2.33 per share. The dividend is payable on March 26^th and marks the 156th consecutive quarter of dividend payments, underscoring Home Depot’s confidence in its cash flow generation and long-term growth prospects.

Reading Through Home Improvement Retailer Results

The interest rate outlook remains a key variable for these home improvement giants, with 30-year fixed mortgage rates currently in the low-6% range and expected to ease modestly toward the mid-5% range by year-end as the Federal Reserve maintains a measured path. This gradual decline could unlock deferred remodel projects and improve housing turnover, benefiting both companies in big-ticket categories like appliances, flooring, and outdoor living.

While near-term affordability challenges persist, the anticipated easing should support a broader recovery, potentially accelerating in the second half of 2026.

The quarterly results signal positive momentum for Home Depot and Lowe’s going forward with their scale, professional customer focus, and digital investments positioning them well as conditions improve. Today’s reaction aside, recent stock performance reflects investor relief surrounding their respective beats and constructive guidance, contrasting with earlier sector concerns.

Bottom Line

For the broader home improvement industry, these reports suggest that while challenges remain surrounding high rates and economic uncertainty, the worst of the slowdown may be behind us.

Overall, these retailers’ execution amid headwinds reinforces their leadership and sets a foundation for renewed growth as rates moderate and consumer confidence rebuilds.

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This article originally published on Zacks Investment Research (zacks.com).

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