Lowe's Companies, Inc. Lowe's (LOW) saw its stock dip in Wednesday premarket trading after the home improvement retailer delivered a mixed bag for its second quarter of 2026. While earnings came in ahead of expectations, revenue fell short, and the company trimmed its full-year outlook, leaving investors to weigh the positives against the lingering softness in certain parts of the business.
Lowe's CEO Flags 'Pressure in Discretionary DIY Spending'
MarketDash
Lowe's (LOW) stock drops in premarket trading after Q2 earnings beat estimates, but revenue and updated full-year guidance fall short.
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Q2 Earnings Beat, Revenue Misses
The company reported net earnings of $2.4 billion, with GAAP diluted earnings of $4.27 per share, flat compared to a year ago. On an adjusted basis, earnings rose 1.6% to $4.40 per share from $4.33, comfortably beating the $4.22 that analysts had penciled in. Both GAAP and adjusted figures included an 11-cent benefit from IEEPA tariff refunds.
Revenue, however, told a slightly different story. Net sales climbed 8.3% to $25.96 billion from $23.96 billion a year earlier, but that still came up short of the $26.16 billion Wall Street was looking for.
Comparable sales inched up 0.2%, helped by strength in the Pro and home services categories. Online sales were a bright spot, jumping 15.7%. But the company noted that "continued pressure on discretionary DIY spending" weighed on demand, a theme that has been echoing across the home improvement sector.
Chairman, President and CEO Marvin R. Ellison struck a cautiously optimistic tone: "Sustained growth in Pro, Online and Home Services led to our fifth consecutive quarter of positive comp sales, despite pressure in discretionary DIY spending." He added that the company remains focused on executing its Total Home strategy and investing to support growth and profitability amid a dynamic near-term environment.
The quarter also included $96 million in pretax expenses tied to the acquisitions of Foundation Building Materials and Artisan Design Group. As of July 31, 2026, Lowe's operated 1,761 stores, representing 196.0 million square feet of retail selling space.
Margins Narrow as Operating Income Rises
Gross margin narrowed to 33.04% from 33.81% a year earlier. Operating income ticked up to $3.55 billion from $3.47 billion, but operating margin slipped to 13.67% from 14.48%, reflecting the cost pressures and investments the company is making.
For the first six months, operating cash flow came in at $7.01 billion, down from $7.61 billion in the same period last year. Capital expenditures totaled $1.06 billion. Lowe's ended the quarter with $3.17 billion in cash and cash equivalents and paid out $673 million in dividends during the quarter.
2026 Outlook Narrowed
Looking ahead, Lowe's tightened its fiscal 2026 sales guidance to approximately $92 billion, down from its previous range of $92 billion to $94 billion. That's below the $93.35 billion analysts had expected. The company now sees adjusted EPS of about $12.25, a cut from its earlier range of $12.25 to $12.75 and well shy of the $12.88 estimate.
On a GAAP basis, Lowe's expects EPS of about $11.75, with comparable sales flat, operating margin of roughly 11.2%, and adjusted operating margin of about 11.6%. The outlook incorporates the tariff refunds recognized in the second quarter but excludes any potential additional refunds in the second half of the year.
LOW Price Action: Lowe's shares fell 3.54% to $208.01 in Wednesday premarket trading.
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