Q4 2025 RESULTS Marvin R. Ellison, Chairman & CEO "We delivered strong results this quarter, as our Total Home strategy is resonating with both our Pro and DIY customers. While the housing macro remains pressured, we are focused on directing what is within our control. We remain confident that we are well-positioned to take share regardless of the macro environment." 12 of 15 Regions Financial Highlights +1.3% COMP SALES -40 basis points vs. LY 32.7% 8.3% OPERATING MARGIN -157 basis points vs. LY 9.0% ADJ. ...

Key Takeaways Lowe's is set to report Q4 results on Feb. 25, with revenues seen rising 9.8% to $20.36B.Lowe's Total Home Strategy and Pro segment expansion likely supported sales and engagement.High rates and weak housing turnover may have curbed demand for big-ticket projects.As Lowe's Companies, Inc. (LOW) prepares to unveil its fourth-quarter fiscal 2025 earnings on Feb. 25, before the opening bell, investors are eager to see if the company can beat market expectations. The Zacks Consensus Estimate for r ...

Core Insights - Home Depot and Lowe's are leading companies in the U.S. home improvement sector, each adopting unique strategies to capture market share amid cautious consumer spending and slower housing turnover [1][4]. Company Overview - Home Depot has a market capitalization of approximately $381.8 billion and operates over 2,300 stores across the U.S., Canada, and Mexico, focusing on professional customers and maintaining strong supplier relationships [2]. - Lowe's, valued at around $158.3 billion, operates more than 1,700 stores primarily in the U.S. and is enhancing its execution through improved merchandising and a "total home" strategy [3]. Strategic Initiatives - Home Depot is expanding its Pro ecosystem through platforms like SRS and GMS, which enhance its reach into specialty building materials and facilitate cross-selling opportunities [5]. - The introduction of AI-powered tools at Home Depot aims to streamline project planning for professional contractors, significantly improving efficiency in material estimation [6][7]. - Lowe's "Total Home" strategy integrates specialized services and a robust digital infrastructure, positioning the company as a comprehensive solution provider for both professionals and DIY homeowners [12]. Market Positioning - Home Depot's focus on professional contractors and advanced technology reinforces its competitive edge, while its exclusive brands and curated assortments enhance customer loyalty [8]. - Lowe's expansion into the high-value Professional market through acquisitions, such as Foundation Building Materials, strengthens its product portfolio and distribution capabilities [13]. Financial Performance Estimates - Home Depot's current fiscal year sales are projected to increase by 3.3%, but EPS is expected to decline by 4.9%. For the next fiscal year, sales are estimated to rise by 4.2% with a 4.3% growth in earnings [17]. - Lowe's current financial-year sales and EPS are expected to grow by 2.9% and 2.2%, respectively, with an anticipated 8.6% rise in sales and 6.3% growth in earnings for the next fiscal year [20]. Stock Performance - Year-to-date, Home Depot shares have increased by 11.4%, while Lowe's shares have risen by 17% [24]. - Home Depot's forward P/E ratio is 25.23, compared to Lowe's 21.55, indicating differing valuations in the market [25]. Investment Outlook - Both companies are enhancing their Pro capabilities and leveraging technology, but Home Depot is currently viewed as better positioned for investors due to its broader scale and advanced digital tools [26].

Core Insights - Home Depot and Lowe's are major players in the home improvement retail sector, with Home Depot leading in market capitalization at approximately $355 billion, while Lowe's stands at about $139 billion [2][3] - Both companies are facing a challenging home improvement market characterized by cautious consumer spending and slower housing turnover, raising questions about their respective investment potentials for 2026 [4] Home Depot Analysis - Home Depot's growth strategy is increasingly focused on its Pro ecosystem, enhanced by the SRS and GMS platforms, which facilitate deeper penetration into specialty building materials and cross-selling opportunities [5] - The introduction of an AI-powered tool for professional contractors aims to streamline project planning and material estimation, significantly improving efficiency compared to traditional methods [6] - Despite these advancements, Home Depot is experiencing structural challenges, with a modest 0.2% increase in comparable sales in Q3, and a noted decline in customer transactions by 1.6% [8][10] - The company reported a lack of storms affecting sales in categories like roofing and plywood, contributing to weaker demand visibility and margin pressure [9] Lowe's Analysis - Lowe's is positioning itself with a "Total Home Strategy" that caters to both DIY homeowners and professional contractors, bolstered by the acquisition of Foundation Building Materials (FBM) to enhance its product offerings [11][12] - The integration of AI technology has improved project planning and inventory management, leading to higher customer satisfaction and operational efficiency [13] - Lowe's focus on high-growth categories and a unique market delivery network positions it well to capitalize on the current housing market dynamics, particularly the "lock-in effect" [14] - The company is projected to achieve a 2.9% increase in sales and a 2.2% rise in EPS for the current fiscal year, with an expected 8.7% sales growth for the next fiscal year [19] Comparative Performance - Over the past six months, Home Depot shares have increased by 2.8%, while Lowe's shares have surged by 17.6%, indicating stronger market performance for Lowe's [23] - Home Depot's forward P/E ratio is 23.63, below its one-year median, while Lowe's stands at 19.19, above its median, suggesting differing valuations [25] - Analysts suggest that Lowe's is a more compelling investment choice for 2026 due to its operational efficiency and strategic focus, despite Home Depot's established market presence [26]

Core Viewpoint - Lowe's Companies, Inc. (NYSE:LOW) is recognized as a strong investment opportunity, particularly for long-term investors seeking high-quality dividend stocks [1] Group 1: Financial Performance and Strategy - Telsey Advisory has reduced its price target for Lowe's from $305 to $285 while maintaining an Outperform rating, indicating confidence in the company's ability to outperform the industry [2] - The third-quarter results showed that Lowe's is making steady progress under its Total Home strategy, with online sales increasing by 11.4% and strong double-digit growth in home services [3] - The acquisition of Foundation Building Materials (FBM) was completed in October, which is expected to enhance Lowe's product lineup and revenue opportunities, particularly for Pro customers [4] Group 2: Capital Allocation and Dividend Policy - Lowe's is committed to disciplined capital allocation, having spent $8.8 billion on the FBM acquisition and distributed $673 million in dividends during the quarter [5] - The company has a strong track record as a dependable dividend payer, boasting 60 consecutive years of dividend growth [5] Group 3: Company Overview - Lowe's is a leading home improvement retailer offering a wide range of products, including construction materials, maintenance supplies, and home decor items [6]

Financial Data and Key Metrics Changes - Third quarter sales reached $20.8 billion, with comparable sales increasing by 0.4% year over year, despite a 100 basis point headwind from hurricanes [5][32] - Adjusted diluted earnings per share were $3.06, reflecting a 6% increase compared to the previous year [5][31] - Adjusted operating margin expanded by approximately 10 basis points, resulting in an adjusted operating margin rate of 12.4% [5][33] Business Line Data and Key Metrics Changes - Positive comparable sales were reported in 10 of 14 merchandise divisions, with notable strength in appliances, flooring, paint, and kitchens and bath [17][32] - Online sales grew by 11.4% during the quarter, driven by increased traffic and strong conversion rates [7] - Home services experienced double-digit comparable sales growth, indicating strong performance in this key initiative [27] Market Data and Key Metrics Changes - Monthly comparable sales were up 2.5% in August, 0.9% in September, and down 2.6% in October, reflecting storm-related demand impacts [32] - Inventory at the end of Q3 was $17.2 billion, down approximately $400 million year over year, aided by inventory productivity initiatives [33] Company Strategy and Development Direction - The company is focused on its 2025 Total Home Strategy, which includes enhancing pro offerings, accelerating online sales, and leveraging loyalty programs [6][8] - The acquisition of Foundation Building Materials (FBM) aims to expand product offerings and enhance fulfillment capabilities, particularly in urban markets [12][13] - Investments in AI capabilities are expected to improve customer engagement and operational efficiency [10][11] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the long-term health of the home improvement sector, despite current consumer anxiety and economic uncertainty [15][16] - The potential for lower interest rates and strong homeowner equity could spur demand for home improvement projects [15][66] - The company anticipates flat comparable sales for the year, with expectations of approximately $86 billion in total sales, including FBM [37] Other Important Information - The company has been recognized for its AI adoption, achieving a milestone award from OpenAI [11] - The company is committed to supporting veterans through community initiatives, including the Freedom Hill project [29] Q&A Session Summary Question: Thoughts on business trends and performance outlook for 2026 - Management noted positive comp performance to start the quarter and improvements in top-line performance since exiting October, indicating that key elements of the Total Home Strategy are working [41][42] Question: Changes in kitchen and bath performance - Management believes Lowe's is gaining market share in the kitchen and bath space due to improved technology and a better go-to-market strategy [48][49] Question: Improving pro survey sentiment and its implications - Management reported that 75% of pros feel confident in their job prospects, with ongoing investments in loyalty programs and fulfillment driving growth [55][57] Question: Macro environment and housing market outlook - Management acknowledged elevated mortgage rates but highlighted strong homeowner equity as a potential driver for future discretionary spending [65][66] Question: Strategy for medium to larger pro customers - Management emphasized the importance of the Milo's Pro Rewards loyalty platform and the integration of FBM to enhance service offerings for pro customers [70][71]

Financial Data and Key Metrics Changes - Third quarter sales reached $20.8 billion, with comparable sales increasing by 0.4% year-over-year, despite a 100 basis point headwind from hurricanes [5][32] - Adjusted diluted earnings per share were $3.06, reflecting a 6% increase compared to the previous year [5][31] - Adjusted operating margin expanded by approximately 10 basis points, resulting in an adjusted operating margin rate of 12.4% [5][33] - Gross margin improved to 34.2%, up 50 basis points from the prior year [33] Business Line Data and Key Metrics Changes - Positive comparable sales were reported in 10 of 14 merchandise divisions, with notable strength in home decor, appliances, flooring, and paint [17][32] - Online sales grew by 11.4% during the quarter, driven by increased traffic and strong conversion rates [7] - Home services experienced double-digit growth, contributing to the overall positive performance [27] Market Data and Key Metrics Changes - The U.S. homeowner market remains healthy, with strong balance sheets and continued consumer spending, although affordability issues persist [14][15] - Home equity levels are high, averaging around $400,000, which may encourage homeowners to invest in their existing properties rather than moving [15][16] Company Strategy and Development Direction - The company is focused on its 2025 Total Home Strategy, which includes enhancing pro offerings, accelerating online sales, and leveraging loyalty programs [6][8] - The acquisition of Foundation Building Materials (FBM) aims to expand product offerings and enhance fulfillment capabilities, particularly in urban markets [12][13] - Investments in AI are expected to improve customer engagement and operational efficiency, with virtual assistants driving sales and customer satisfaction [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, noting that lower interest rates could spur demand in the home improvement sector [15][16] - The company anticipates flat comparable sales for the year, with expectations of approximately $86 billion in total sales, including FBM [37] - Management highlighted the importance of operational discipline and strategic investments in positioning the company for long-term growth [38] Other Important Information - The company is on track to achieve a multi-year goal of reducing in-store SKU count by 15% by the end of 2025 [24] - The marketplace initiative is showing early promise, exceeding expectations in seller onboarding and customer adoption [78][80] Q&A Session Summary Question: How is the company thinking about the trend in the business in light of recent performance? - Management noted positive comp performance to start the quarter and improvements in top-line results since exiting October, indicating that key elements of the Total Home Strategy are working [41][42] Question: What has changed in the kitchen and bath category? - Management believes the company is taking market share in this space, supported by improved technology and a better go-to-market strategy [48][49] Question: Can you elaborate on the improving pro survey sentiment? - Management reported that 75% of small to medium pros feel confident in their job prospects, with ongoing investments in loyalty programs and fulfillment driving growth [55][57] Question: What is the company's strategy for the medium to larger pro market? - The strategy focuses on leveraging the MyLowe's Pro Rewards platform and enhancing product offerings to capture market share in the small to medium pro segment [70][71] Question: What is the initial performance of the marketplace? - Management expressed excitement about the marketplace launch, noting it is exceeding expectations in financial performance and seller quality [77][78]

Financial Data and Key Metrics Changes - Third quarter sales reached $20.8 billion, with comparable sales increasing by 0.4% year over year, despite a 100 basis point headwind from Hurricanes Helene and Milton [4][29] - Adjusted diluted earnings per share were $3.06, reflecting a 6% increase compared to the previous year [4][28] - Gross margin improved to 34.2%, up 50 basis points from the prior year [30] - Adjusted operating margin rate was 12.4%, an increase of 10 basis points year over year [30] - Inventory at the end of Q3 was $17.2 billion, down approximately $400 million compared to the previous year [30] Business Line Data and Key Metrics Changes - Positive comparable sales were reported in 10 of 14 merchandise divisions, with notable strength in appliances, flooring, paint, and kitchens and bath [15][29] - Online sales grew by 11.4% during the quarter, driven by increased traffic and strong conversion rates [5] - Home services experienced double-digit comparable sales growth, indicating strong performance in this key initiative [24] Market Data and Key Metrics Changes - The U.S. homeowner market remains healthy, with strong balance sheets and continued consumer spending, although affordability and economic uncertainty weigh on consumer confidence [12][13] - The average homeowner has record levels of equity, approximately $400,000, which may lead to increased investment in home improvement projects [13] Company Strategy and Development Direction - The company is focused on its 2025 Total Home Strategy, which includes enhancing pro offerings, accelerating online sales, and leveraging loyalty programs [5][6] - The acquisition of Foundation Building Materials (FBM) aims to expand product offerings and enhance fulfillment capabilities, particularly in urban markets [11][12] - Investments in AI are expected to improve customer engagement and operational efficiency, with virtual assistants significantly increasing conversion rates [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the long-term health of the home improvement sector, despite current macroeconomic uncertainties [14] - The company anticipates that lower interest rates could stimulate demand for home improvement projects, particularly through home equity loans [13][64] - The outlook for 2026 remains cautious, with expectations for flat comparable sales for the year [33] Other Important Information - The company is on track to achieve its multi-year goal of reducing in-store SKU count by 15% by the end of 2025 [21] - The marketplace initiative is showing early promise, exceeding expectations in seller onboarding and customer adoption [72][73] Q&A Session Summary Question: How is the business trend looking in light of recent performance? - Management noted positive comp performance to start the quarter, with improvements in top-line performance since exiting October [37][39] Question: What is the outlook for kitchen and bath categories? - Management believes Lowe's is gaining market share in kitchen and bath, supported by improved technology and product offerings [45][46] Question: Can you elaborate on the improving sentiment among pros? - The small to medium pro business remains stable, with 75% of pros feeling confident in their job prospects [52] Question: How does the company view the current housing market? - Management acknowledged elevated mortgage rates but highlighted the strong equity position of homeowners as a potential driver for future home improvement spending [62][64] Question: What are the early margin scenarios for FBM and ADG? - Initial estimates suggest a 50 basis point impact on margins in 2026, with a focus on gross margin improvements [56]

Financial Performance - The company delivered positive comp sales growth[3] - Gross margin was 34.2%, a +50 basis points increase compared to the prior year[3] - Operating margin was 11.9%, a -65 basis points decrease compared to the prior year[3] - Adjusted operating margin was 12.4%, a +10 basis points increase compared to the prior year[3] - Diluted EPS was $2.88, a -3.7% decrease compared to the prior year[3] - Adjusted diluted EPS was $3.06, a +5.9% increase compared to the prior year[3] - The company returned $673 million to shareholders through dividends[3] Sales Trends - Overall comp sales increased by +0.4%[3] - Comp transactions increased by +2.5%[5] - Comp average ticket decreased by -2.6% to $106.26[5] - Online sales growth decreased by -3.0%[5] Strategic Initiatives - The company closed on the acquisition of Foundation Building Materials[1,6]

Core Insights - Lowe's Companies, Inc. has a market capitalization of $136.1 billion and is a leading home improvement retailer focused on enhancing homes and businesses through its Total Home Strategy [1] - The company is set to announce its fiscal Q3 2025 results on November 19, with analysts expecting an adjusted EPS of $3, reflecting a 3.8% increase from the previous year [2] - For fiscal 2025, an adjusted EPS of $12.32 is anticipated, marking a 2.7% rise from fiscal 2024, with further growth expected to $13.31 in fiscal 2026 [3] Financial Performance - Lowe's shares have declined nearly 9% over the past 52 weeks, underperforming the S&P 500 Index's 16.9% rise and the Consumer Discretionary Select Sector SPDR Fund's 19.4% return [4] - The company reported a better-than-expected Q2 2025 adjusted EPS of $4.33 and raised its annual sales forecast to between $84.5 billion and $85.5 billion [5] Analyst Sentiment - Analysts maintain a cautiously optimistic view on Lowe's stock, with a "Moderate Buy" rating. Among 29 analysts, 18 recommend "Strong Buy," one suggests "Moderate Buy," nine indicate "Hold," and one gives "Strong Sell" [6] - The average analyst price target for Lowe's is $282.12, indicating a potential upside of 16.2% from current levels [6]