It has been about a month since the last earnings report for Lowe's (LOW). Shares have lost about 10.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Lowe's due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Lowe's Companies, Inc. before we dive into how investors and analysts have reacted as of late.
Lowe's Q4 Earnings Beat on Pro Strength and Holiday Performance
Lowe’s posted fourth-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year. The Mooresville, NC-based home improvement retailer posted another quarter of positive comparable sales, supported by continued strength in Pro, online and home services, along with solid holiday demand.
Management highlighted that its Total Home strategy continues to resonate with both Pro and DIY customers, even as the broader housing backdrop remains pressured. The company also introduced its fiscal 2026 outlook, signaling confidence in its ability to gain market share through productivity initiatives and strategic investments.
LOW’s Quarterly Performance: Key Metrics & Insights
Lowe’s posted adjusted earnings of $1.98 per share, which beat the Zacks Consensus Estimate of $1.95 and increased 2.6% from the prior-year adjusted earnings of $1.93. On a reported basis, including $149 million in pre-tax expenses related to the acquisitions of Foundation Building Materials and Artisan Design Group, earnings were $1.78 per share compared with $1.99 in the prior-year period.
Net sales reached $20,584 million, surpassing the Zacks Consensus Estimate of $20,365 million and marking a significant increase from $18,553 million reported in the fourth quarter of fiscal 2024. This growth was underpinned by a 1.3% rise in comparable sales.
LOW’s Margin & Cost Details
The gross margin for the quarter was 32.5%, a contraction of 40 basis points from 32.9% in the year-ago period. Adjusted gross margin came in at 32.7%.
SG&A expenses rose to 21.4% of sales, up from 20.6% last year, reflecting the impact of acquisition-related costs and associate bonuses. Adjusted SG&A expenses, as a percentage of sales, came in at 21.4%.
As a result, operating income for the quarter was $1,708 million, down from $1,830 million in the prior-year quarter. The operating margin settled at 8.3% compared with 9.9% in the fourth quarter of 2024. LOW reported an adjusted operating margin of 9%.
LOW’s Financial Health Snapshot
The company ended the quarter with cash and cash equivalents of $982 million, long-term debt (excluding current maturities) of $37,490 million and a shareholders’ deficit of $9,917 million.
For fiscal 2025, net cash provided by operating activities totaled $9,864 million, up from $9,625 million in fiscal 2024. During the fourth quarter, the company paid $673 million in dividends, bringing the total returned to shareholders through dividends for the fiscal year to $2.6 billion. As of Jan. 30, 2026, Lowe's operated 1,759 stores with approximately 196 million square feet of retail selling space.
A Sneak Peek Into LOW’s FY26 Outlook
Lowe’s anticipates fiscal 2026 total sales between $92 billion and $94 billion, representing an increase of 7% to 9%. Comparable sales are expected to range from flat to up 2%. The company projects an adjusted operating margin of 11.6% to 11.8%, excluding roughly 40 basis points related to intangible asset amortization.
Management foresees adjusted earnings in the band of $12.25-$12.75 per share. Net interest expense is forecasted at approximately $1.6 billion, with capital expenditures projected to be roughly 2.5 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Lowe's has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. It's no surprise Lowe's has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
