Core Insights - Lowe's (LOW) and Home Depot (HD) are in a competitive market, both facing challenges as consumer spending on big-ticket home improvement items has decreased post-COVID [1][15] - Both companies have underperformed relative to the S&P 500 in 2025, reflecting a similar trajectory in their stock performances [1][7] Analyst Expectations - Analysts have not revised EPS and sales estimates for both companies recently, with LOW expected to see 1.5% EPS growth on 3.4% higher sales, while HD is projected to have a 5.4% increase in EPS with 1.0% sales growth [3] - Despite LOW's anticipated stronger sales growth, HD has shown more resilience in its top line, with year-over-year (YoY) growth rates turning positive after previous declines [4][5] Sales and Performance Metrics - LOW's YoY sales growth rates have been negative since early 2023, while HD's sales have shown improvement with a smaller YoY decline of 0.3% compared to LOW's 1.7% [8][10] - HD's shares trade at a forward 12-month earnings multiple of 25.3X, a 29% premium over LOW's 19.6X, indicating a historical premium for HD [9] Market Environment - Both companies are navigating a challenging demand environment post-COVID, with rising interest rates contributing to softer consumer demand [15][16] - Guidance from Home Depot's earnings report will be crucial for LOW's expectations, as both companies maintain a Zacks Rank 3 (Hold) [17]

Earnings Season Overview - The second quarter earnings season has been successful with more beats and raises than misses, particularly led by the Mag 7 stocks [1] - Nvidia's upcoming report is highly anticipated [1] Retail Sector Focus - This week's focus is on major retailers to assess price increases, inflation, tariff impacts, and consumer behavior [2][3] - Key retailers to watch include Walmart (WMT) and Target (TGT), along with home improvement retailers like Home Depot (HD) and Lowe's (LOW) [3] Home Improvement Retailers (Home Depot & Lowe's) - Home Depot (HD) has a strong earnings surprise track record with only one miss in the last five years [4] - Home Depot's earnings have declined in the last couple of years due to housing market conditions and tariffs, with a projected earnings decline of 1.4% to 4%, but a rebound is expected next year [5][6] - Lowe's (LOW) also has a great earnings surprise track record with earnings expected to decline but then recover, projecting a 2.4% to 4% gain this year and another in 2027 [7][8] - Both Home Depot and Lowe's shares haven't significantly declined as a turnaround is expected and priced in [9] General Retailers (Walmart & Target) - Walmart (WMT) has been performing strongly, with shares attempting to break out, and earnings looking better than Home Depot and Lowe's [9][10] - Walmart's valuation is at 38 times earnings, with a strong earnings surprise track record [10] - Target (TGT) is struggling with declining earnings, trading near 5-year lows, and a 15.6% decline expected for this year [12][13] - Both Walmart and Target are being watched for pricing strategies and consumer buying behavior, considering factors like back-to-school shopping and groceries [11][12][14] Specialty Retailer (Estee Lauder) - Estee Lauder (EL) has a strong earnings track record with mostly beats, but earnings have declined, especially due to the struggling Chinese consumer [15] - Estee Lauder's earnings are expected to improve in the next couple of years, but a 42% decline is expected this year [16] - Estee Lauder's forward PE is not cheap at 42 times, even with the share price decline [16] - Tariffs are impacting beauty products, with E.L.F beauty raising prices, and Estee Lauder's response is being monitored [18]

Retail Earnings & Tariffs Impact - Retail sector is facing a significant week with earnings reports from Home Depot, Target, Lowe's, and Walmart [1] - Potential impact of tariffs on the financial results of these retailers is a key concern [1] - Three out of the four retailers mentioned use accounting methods that could reveal the impact of tariffs [2] Companies to Watch - Home Depot's results will be released tomorrow [1] - Target and Lowe's will report on Wednesday [1] - Walmart's earnings are scheduled for Thursday [1]

Group 1: Earnings Performance - The earnings reports for Q2 of the S&P 500 companies have largely exceeded expectations, with profits growing approximately 12% year-over-year, significantly higher than the 5% growth predicted by analysts in early July [1][2]. - Over two-thirds of the profit growth in Q2 came from the communication services and information technology sectors, primarily driven by the performance of technology companies [2][3]. - The S&P 500 index has risen 29% from its low in April, with a year-to-date increase of 9.7% [2]. Group 2: Retail Sector Focus - A series of major retail companies, including Home Depot, Lowe's, Target, and Walmart, are set to report their earnings, which will conclude the earnings season [4][5]. - The LSEG retail/dining index anticipates a 5.7% year-over-year profit growth, with major retailers like Walmart and Costco expected to see profit growth rates approximately 31% higher than last year [5]. - Strong retail sales in June and July, along with low unemployment and good consumer confidence, are positive indicators for many retailers in Q2 [4]. Group 3: Economic Outlook and Consumer Behavior - There is a noted "polarization" in the economy, with companies not benefiting from AI spending struggling to maintain their positions [3]. - Some analysts express caution regarding future consumer spending, as 51% of surveyed consumers plan to cut back on expenditures due to economic conditions [6]. - Retailers are expected to discuss pricing strategies extensively this earnings season, with discount retailers like Walmart and Costco likely to benefit from consumer demand for affordable goods [6].

Core Viewpoint - Home Depot and Lowe's are set to report their Q2 earnings, with both companies showing positive stock momentum despite earlier tariff challenges. The upcoming earnings reports will be critical in assessing their recovery and future performance [1][11]. Group 1: Q2 Earnings Expectations - Home Depot's Q2 sales are projected to increase by 5% to $45.51 billion, up from $43.18 billion a year ago, with earnings expected to rise by approximately 1% to $4.71 per share from $4.67 [2]. - Lowe's Q2 sales are anticipated to grow nearly 2% to $23.99 billion compared to $23.59 billion in the prior period, with EPS expected to increase by 3% to $4.24 from $4.10 [3]. Group 2: Tariff Strategies - Lowe's has been more affected by tariff increases due to its reliance on imports from China, Canada, and Mexico. The CEO has emphasized competitive pricing and internal strategies to mitigate customer impact, including supply chain diversification and product redesign [4]. - Home Depot has a more diversified supply chain, sourcing over 50% of its products from U.S. suppliers, and has managed to shield customers from tariff impacts by avoiding aggressive price increases [5]. Group 3: Valuation Comparison - Lowe's stock is valued at 20.5X forward earnings, which is lower than Home Depot's 26.6X. Lowe's also trades below the industry average of 21X and the S&P 500's 24.7X [8]. - Home Depot's price-to-sales ratio stands at 2.4X, while Lowe's is below the optimal level of less than 2X [8]. Group 4: Dividend Comparison - Home Depot offers a 2.3% annual dividend yield, which is higher than Lowe's 1.9%. Both companies' dividends exceed the industry average of 1.06% and the S&P 500's average of 1.15% [10]. Group 5: Investment Outlook - The upcoming Q2 reports will be crucial for both companies to determine if they have moved past tariff challenges. Home Depot is viewed as a more favorable investment due to its diversified supply chain, while Lowe's may appeal to investors looking for a cheaper stock price [11].

Group 1: Lowe's Strategic Initiatives - Lowe's Companies, Inc. is enhancing its competitive edge through technology integration and loyalty programs, introducing "Mylow," an AI-powered Home Improvement Virtual Advisor, and a redesigned MyLowe's Pro Rewards program as part of its "Total Home" strategy [1][4] - Mylow, developed with OpenAI, offers step-by-step project guidance and is integrated into Lowe's app and website, facilitating immediate purchases of recommended tools and materials [2][9] - The revamped Pro Rewards program simplifies enrollment, includes a Spanish-language option, and allows points to be earned from the first purchase, aiming to increase wallet share among Pro customers [3][4] Group 2: Market Context and Competitor Strategies - In a selective spending environment, Lowe's is betting on AI and loyalty upgrades to deepen customer relationships and improve conversion rates, with success dependent on Mylow's recommendation accuracy and the Pro Rewards program's effectiveness [4] - The Home Depot is enhancing its in-store competitiveness by equipping associates with advanced digital tools to improve customer satisfaction and sales performance [5] - Floor & Decor is focusing on both digital and in-store strategies, broadening design services and customer offerings to enhance its competitive advantage [6][7] - Williams-Sonoma is leveraging a digital-first strategy, advancing mobile re-platforming and AI personalization to drive growth and improve e-commerce sales [8]

Core Viewpoint - Lowe's is expected to report quarterly earnings of $4.24 per share, a 3.4% increase year-over-year, with revenues projected at $23.99 billion, reflecting a 1.7% year-over-year increase [1] Earnings Estimates - The consensus EPS estimate has been revised 0.2% lower over the last 30 days, indicating a collective reevaluation by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong relationship between earnings estimate revisions and short-term stock price performance [3] Key Metrics - Analysts forecast the total number of stores for Lowe's to reach 1,752, up from 1,746 a year ago [4] - The consensus estimate for total sales floor square footage is 195.42 million, compared to 195.00 million the previous year [5] - The average store size selling square feet is expected to remain at 112.00 thousand, unchanged from the year-ago figure [5] Stock Performance - Lowe's shares have increased by 15.8% in the past month, outperforming the Zacks S&P 500 composite, which moved up by 3.3% [5] - With a Zacks Rank of 3 (Hold), Lowe's is anticipated to mirror overall market performance in the near future [5]

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Group 1: Company Performance - Lowe's shares increased by 4.7% to $256.33 in the last trading session, with a notable trading volume, and have gained 13.9% over the past four weeks [1] - The company is expected to report quarterly earnings of $4.24 per share, reflecting a year-over-year increase of 3.4%, with revenues projected at $24.01 billion, up 1.8% from the previous year [3] - The consensus EPS estimate for Lowe's has been revised 1.4% lower in the last 30 days, indicating a negative trend in earnings estimate revisions [4] Group 2: Strategic Focus and Growth Prospects - Lowe's strategic focus on the Pro customer segment includes enhanced product availability, timely delivery, and a broader assortment supported by a rewards program, which underpins long-term growth prospects [2] - The company's expansion plans, acquisition of ADG, and emphasis on superior customer experiences strengthen its position as a leading omnichannel retailer [2] - Ongoing investments in service enhancements, operational efficiency, and AI-driven shopping solutions are expected to bolster customer engagement and sustain demand momentum [2] Group 3: Industry Comparison - Lowe's is part of the Zacks Retail - Home Furnishings industry, where Home Depot also operates, finishing the last trading session 2.8% higher at $407.18, with a 10.4% return over the past month [4] - Home Depot's consensus EPS estimate has changed by -0.1% over the past month to $4.71, representing a year-over-year change of +0.9% [5]

Group 1 - The core viewpoint of the article highlights that Lowe's (LOW) stock experienced a 5.01% increase, reaching $257.14 per share, with a total market capitalization of $144.11 billion as of August 14 [1] - Financial data indicates that Lowe's total revenue for the period ending May 2, 2025, is projected to be $20.93 billion, reflecting a year-over-year decrease of 2.03%, while the net profit attributable to shareholders is expected to be $1.641 billion, down 6.5% year-over-year [1] - Lowe's is recognized as one of the top 50 home improvement companies by Fortune magazine and serves over 19 million customers weekly across the United States, Canada, and Mexico [2] Group 2 - A significant event reminder is that Lowe's is scheduled to release its fiscal year 2025 mid-term report on August 20, prior to market opening [2] - The company focuses on supporting its communities through K-12 public education and community improvement projects [2]