Lowe’s Rallies After Earnings — What’s Driving the Gap With Home Depot
Lowe’s just pulled ahead of its biggest rival after a solid Q3 beat
Lowe’s just pulled ahead of its biggest rival after a solid Q3 beat, sending shares up over 5% in a single day — one of the best performers in the S&P 500. The gap with Home Depot is getting clearer, and it’s all about how the two are handling the housing market squeeze.
Lowe’s Companies (LOW)
Financial Score: 95 / 99
Quick Tip
To keep your portfolio strong, stay on top of the financials for each company you hold. Solid companies mean better returns, so be sure to check in on their quarterly and annual numbers.Interesting stocks usually score 80+ on the Financial Scale, with top players hitting 90+. If that score dips below 80, it might be a good time to consider cutting ties before things take a turn.The Numbers — Beat on EPS, Solid on Revenue
Lowe’s posted adjusted earnings of $3.06 per share, topping the $2.97 consensus, and revenue of $20.81 billion, just below the $20.82 billion forecast. The real story was in the details: online sales jumped 11.4%, double-digit growth in home services (think installation and pro help), and strong demand from professional contractors.
Comparable sales grew 0.4%, missing Wall Street’s 1% target, but still beat Home Depot’s 0.2% rise. That small difference is huge in retail — it means Lowe’s is retaining more traction in the face of cautious homeowners.
Guidance — Raising the Bar
Lowe’s hiked its full-year revenue forecast to $86 billion, up from $84.5–85.5 billion and above consensus. But it trimmed its EPS guidance to $12.25 (at the low end of its previous $12.20–12.45 range) due to ongoing macro uncertainty. Management says they’re expecting roughly flat comp sales for the year, reflecting the challenging environment.
Still, the message is clear: Lowe’s is confident in its growth engine even as the housing market sags.
Why Lowe’s Outperforms — The Pro, Online, and Services Push
Home Depot executives were super cautious last quarter, pointing to homeowner fatigue and softer big-project demand. Lowe’s is telling a different story. CEO Marvin Ellison said the current quarter started with positive comp sales, and JPMorgan analysts called that a notable signal, especially given that Home Depot saw storm-driven demand drop sharply.
Lowe’s is leveraging its pro segment (contractors and tradespeople), which now accounts for over 30% of sales, and its digital channel, which grew 11.4% in Q3. Home services — a category including appliance installs and flooring jobs — saw double-digit growth. This shift is key: even as homeowners cut back, contractors and DIYers are holding up the business.
The Big Picture — Smarter Inventory, More Digital
Lowe’s cut inventory by $400 million year over year to $17.2 billion, optimizing for fast-moving products. The company’s gross margin improved to 34.2% (up 50 basis points), and its adjusted operating margin rose to 12.4%.
Strategically, Lowe’s is pushing rural store rollouts, expanding workwear and pet offerings to over 1,000 stores, and integrating acquisitions like Foundation Building Materials. By year-end, they’re set to reduce in-store SKUs by 15%, focusing on high-turnover products.
What’s Next — 2026 and Beyond
Looking ahead, Lowe’s expects continued strength in its Pro and digital channels, and growth in connected home solutions like the Aqara Smart Lock B50, now in over 500 stores. The company’s 2028 projections call for $94 billion in revenue and $8.4 billion in earnings — a 4% annual revenue growth target and $1.6 billion more in profit than today.
At a time when Home Depot’s guidance keeps shrinking, Lowe’s is playing offense, not just defense. For long-term investors, that’s the edge: even if comp sales are flat, the company’s digital transformation, pro focus, and inventory discipline set up a better long-term growth profile.
If you’re still debating which home improvement play to back, Lowe’s is clearly the one leaning into change while the market waits for a housing rebound.
Someone’s sitting in the shade today because someone planted a tree a long time ago. ― Warren Buffett.
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