Lowe’s Companies (LOW) — Q3 2026 Earnings Preview
Key Preview Takeaways
| Factor | Details & What to Watch |
|---|---|
| Guidance vs. Consensus | FY26 guidance was cut to the low end: $92B sales, flat comps, $12.25 adj. EPS. Consensus for Q3: $22.3B revenue, $2.80 EPS. |
| Comps Trend | Q2 2026 comps +0.2%, Q1 +0.6%. Guidance now expects flat comps for FY26. Q3 guide: comps in line with full-year (flat). |
| DIY vs. Pro | Persistent DIY macro pressure; Pro, Online, and Home Services remain growth drivers. Pro outperformance expected to continue. |
| Margin Pressures | Gross margin pressured by FBM/ADG dilution, elevated fuel/transportation costs. Q3 guide: adj. EPS ~7% below prior year. |
| Tariff Refunds/Promos | Q2 included $80M tariff refund benefit; no further refunds assumed in H2. Q2 saw aggressive competitor promotions tied to tariff refunds—management expects normalization in H2. |
| Online Growth | Digital sales +15.7% in Q2, +15.5% in Q1. Continued strong digital momentum expected. |
| FBM/ADG Performance | Ongoing residential construction softness; commercial side of FBM remains a partial offset. Integration/tuck-in M&A continues. |
| Cost Management/PPI | $1B productivity target for FY26; focus on offsetting inflation and cost headwinds. |
| Capital Allocation | Capex up to $2.5B; deleveraging toward 2.75x net leverage by mid-2027. Dividend maintained. |
Quarterly Financials — Actuals and Consensus
Quarterly Results and Consensus (Q3 2025–Q3 2026)
| Quarter | Revenue ($M) | YoY Growth | Gross Margin (%) | Net Income ($M) | EPS (GAAP) | Consensus Revenue ($M) | Consensus EPS |
|---|---|---|---|---|---|---|---|
| Q3 2026E | 22,341* | 33.0* | 1,610* | 2.80* | 22,341 | 2.80 | |
| Q2 2026 | 26,102 | +8.3% | 32.6 | 2,364 | 4.15 | ||
| Q1 2026 | 23,078 | +10.3% | 32.7 | 1,628 | 2.90 | ||
| Q4 2025 | 20,584 | +10.9% | 32.5 | 999 | 1.78 | ||
| Q3 2025 | 20,813 | +3.2% | 34.2 | 1,616 | 2.88 |
*Consensus for Q3 2026 from provided data.
Full-Year Guidance and Consensus
FY2026 Guidance vs. Consensus
| Metric | FY2026 Guidance (as of Q2) | Previous Guidance | Consensus FY2026 | FY2025 Actual |
|---|---|---|---|---|
| Total Sales ($B) | 92.0 | 92.0–94.0 | 92.1 | 86.3 |
| Comparable Sales (%) | Flat | Flat–up 2% | +0.2% | |
| Operating Margin (%) | 11.2 | 11.2–11.4 | 11.8* | |
| Adj. Operating Margin (%) | 11.6 | 11.6–11.8 | 12.1 | |
| Diluted EPS ($) | 11.75 | 11.75–12.25 | 11.87 | 11.85 |
| Adj. Diluted EPS ($) | 12.25 | 12.25–12.75 | 12.25 | 12.28 |
| Capital Expenditures ($B) | Up to 2.5 | Up to 2.5 | 2.2 |
*FY2025 operating margin is adjusted basis.
Last Year’s Q3 — Context for Comparables
- Q3 2025 Revenue: $20.8B (+3.2% YoY)
- Q3 2025 Comps: +0.4%
- Q3 2025 Adj. EPS: $3.06 (+5.9% YoY)
- Macro: Lapped hurricane-related demand, cited 100 bps headwind from storms.
- Drivers: Pro, online, appliances, home services all positive; DIY still pressured.
- Margin: Adjusted operating margin expanded 10 bps YoY; gross margin up 50 bps.
Conclusion: Q3 2025 was a modestly positive quarter, but benefited from easier weather-related compares and strong execution in Pro and digital. Q3 2026 faces a tougher comp as Q3 2025 was not a down quarter, but the macro environment has since become more challenging for DIY.
Intra-Quarter and Recent Commentary
Demand Trends
- Q2 2026: Comps +0.2%, with May -0.4%, June +1.7%, July -1.2%. July pressured by aggressive competitor promos and weather.
- Q3 2026 Outlook: Management expects comps to be flat, in line with full-year guide. No improvement in DIY demand expected; Pro, Online, and Home Services remain growth drivers.
- Digital: Online sales growth remains robust (+15.7% in Q2, +15.5% in Q1).
Margin and Cost Pressures
- Gross Margin: Down 80 bps YoY in Q2 (adj. basis), reflecting FBM/ADG dilution and higher fuel/transportation costs. Tariff refund in Q2 ($80M) largely offset by these costs.
- Q3 2026 Guidance: Adj. EPS expected to be ~7% below prior year, reflecting ongoing cost headwinds and lack of further tariff refunds.
Promotional Environment
- Q2 2026: Aggressive competitor promotions tied to tariff refunds, especially in seasonal categories (grills, patio, live goods). Management expects this to normalize in H2.
- H2 2026: Lowe’s plans to remain disciplined, focusing on loyalty-driven offers and value, not broad-based promotions.
FBM/ADG Acquisitions
- Residential Construction: Remains under pressure; ADG fully exposed, FBM ~45% exposed. Commercial side of FBM (55%) performing better.
- Integration: Ongoing, with tuck-in M&A and synergy realization continuing.
Productivity Initiatives
- PPI Target: $1B in productivity savings for FY26, focused on offsetting inflation and supporting reinvestment.
Summary and Conclusions
- Q3 2026 Setup: Lowe’s is coming off five consecutive quarters of positive comps, but faces a tougher macro and competitive environment, especially for DIY. Q3 2025 was not a weak comp, so YoY growth will be challenging.
- Key Factors for Q3 2026:
- Can Pro, Online, and Home Services continue to offset DIY weakness?
- Will gross margin stabilize despite ongoing cost pressures and no further tariff refunds?
- Is the promotional environment rationalizing as management expects, or will competitors continue aggressive pricing?
- How are FBM/ADG performing, and is commercial strength enough to offset residential softness?
- Are PPI initiatives delivering enough to protect margins?
- Consensus Expectations: Q3 2026 revenue of $22.3B (+7% YoY), EPS of $2.80 (-8% YoY). Guidance implies flat comps and continued margin pressure.
- Watch for: Any signs of stabilization or improvement in DIY, further digital acceleration, updates on tariff refunds, and commentary on the competitive/pricing environment.
Bottom Line: The most important factors for Q3 2026 are Lowe’s ability to maintain positive comps in a flat market, protect margins amid cost and promo headwinds, and demonstrate that Pro, Online, and Home Services can continue to drive growth as DIY remains pressured. Management’s discipline on pricing and cost control, as well as progress on integration and synergies from FBM/ADG, will be closely scrutinized.
