Company Overview - The Home Depot is the world's largest home improvement retailer, operating a total of 2,353 retail stores and over 800 branches across various regions including all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces, and Mexico [3] - The company employs over 470,000 associates and its stock is traded on the New York Stock Exchange (NYSE: HD), being included in the Dow Jones industrial average and Standard & Poor's 500 index [3] Upcoming Events - Ted Decker, chair, president and CEO, along with Billy Bastek, executive vice president of merchandising, will present at the Goldman Sachs 32nd Annual Global Retailing Conference on September 3, 2025, at 10:20 a.m. ET [1] - The presentation will be available via a live webcast and will be archived approximately one hour after the event [2]

Group 1 - Lowe's exceeded Wall Street's earnings expectations, driven by increased demand for home projects during the quarter [1] - The company announced the acquisition of Foundation Building Materials for approximately $8.8 billion to enhance its business with home professionals [1] - Lowe's revised its full-year sales outlook to a range of $84.5 billion to $85.5 billion, up from the previous range of $83.5 billion to $84.5 billion [2] Group 2 - For fiscal Q2, Lowe's reported a net income of $2.4 billion, or $4.27 per share, compared to $2.38 billion, or $4.17 per share, in the same period last year [3] - Revenue for the quarter increased to $29.36 billion, surpassing expectations of $23.96 billion [6] - The company reiterated its comparable sales forecast, expecting them to be flat to up 1% from the prior year [2]

Core Viewpoint - Lowe's Companies, Inc. has announced a definitive agreement to acquire Foundation Building Materials for approximately $8.8 billion, aiming to enhance its offerings for professional customers and position the company for long-term sustainable sales growth and profit expansion [1][4]. Company Overview - Lowe's is a leading home improvement company in North America, serving around 16 million customer transactions weekly, with total fiscal year 2024 sales exceeding $83 billion and operating over 1,700 stores [9]. - Foundation Building Materials is a prominent distributor of interior building products in North America, with over 370 locations and a revenue of approximately $6.5 billion in 2024 [2][10]. Acquisition Details - The acquisition price of $8.8 billion reflects an adjusted EBITDA multiple of 13.4x, and Lowe's has secured $9.0 billion in bridge financing from Bank of America and Goldman Sachs [5][6]. - The transaction is expected to close in the fourth quarter of 2025, subject to regulatory approval, and is anticipated to be accretive to adjusted diluted earnings per share in the first full year post-closing [6]. Strategic Implications - The acquisition is expected to accelerate Lowe's Total Home strategy by enhancing its offerings to professional customers through improved capabilities, faster fulfillment, and better digital tools [3][4]. - The combined strengths of Lowe's and FBM are projected to create a premier platform for serving professional customers in a $250 billion total addressable market [4]. Financial Performance - FBM has demonstrated significant growth, achieving a compound annual growth rate (CAGR) of approximately 25% for revenue and 30% for adjusted EBITDA from 2019 to 2024 [2].

Core Insights - Lowe's Companies, Inc. reported net earnings of $2.4 billion and diluted earnings per share (EPS) of $4.27 for the quarter ended August 1, 2025, an increase from diluted EPS of $4.17 in the same quarter of the previous year [2][16] - Comparable sales increased by 1.1% during the quarter, with total sales reaching $24.0 billion compared to $23.6 billion in the prior-year quarter [3][4] - The company recognized $43 million in pre-tax expenses related to the acquisition of Artisan Design Group (ADG), which negatively impacted diluted EPS by $0.06 [2][21] Financial Performance - Adjusted diluted EPS for the quarter was $4.33, reflecting a 5.6% increase compared to the prior-year adjusted diluted EPS of $4.10 [2][24] - Gross margin for the quarter was $8.1 billion, representing 33.81% of net sales, compared to 33.47% in the prior-year quarter [16] - Operating income was $3.469 billion, with an operating margin of 14.48% for the quarter [16] Capital Allocation - The company invested $1.3 billion in the acquisition of ADG and paid $645 million in dividends during the quarter [5][16] - Cash and cash equivalents at the end of the period were $4.86 billion, an increase from $4.36 billion a year earlier [19][18] Business Outlook - Lowe's updated its full-year 2025 outlook to reflect the inclusion of ADG, maintaining expectations for core business performance [6][12] - The company anticipates total sales for fiscal 2025 to be between $84.5 billion and $85.5 billion, with comparable sales expected to be flat to up 1% compared to the prior year [12][6] Operational Highlights - As of August 1, 2025, Lowe's operated 1,753 stores, representing 195.5 million square feet of retail selling space [4] - The company serves approximately 16 million customer transactions weekly in the United States [10]

Market Overview - U.S. stock futures declined on Wednesday following mixed trading on Tuesday, with major benchmark indices showing lower futures [1] - The S&P 500 and Nasdaq 100's retreat was attributed to failed peace talks involving President Trump and European leaders [1] - The Dow Jones index ended slightly higher, while the S&P 500 and Nasdaq Composite saw declines of 0.59% and 1.46% respectively [6][7] Economic Indicators - Investors are focused on Federal Reserve Chair Jerome Powell's upcoming speech for signals on interest rates, with an 82.9% likelihood of a rate cut projected for the September 17 decision [2] - The 10-year Treasury bond yielded 4.31%, while the two-year bond was at 3.76% [2] - U.S. housing starts increased by 5.2% to an annualized rate of 1.428 million in July, while building permits declined by 2.8% to an annualized rate of 1.354 million [5] Company Performance - Intel Corp. saw a 7% rally, extending its monthly gains to 27% after a $2 billion investment from SoftBank Group [5] - Palo Alto Networks Inc. jumped over 3% after reporting strong quarterly results [5] - La-Z-Boy Inc. dropped 24.57% after reporting weaker-than-expected financial results for Q1 of fiscal 2026 [15] Sector Performance - Real estate, utilities, and consumer staples stocks recorded the biggest gains on Tuesday, while information technology and communication services sectors closed lower [4] - Small-cap and value stocks have shown a tight correlation with interest rate expectations, becoming increasingly reactive to the Fed's next move [10][11] Analyst Insights - Economist Jeremy Siegel emphasized that Powell's speech could significantly influence market direction, with two primary scenarios outlined [9][10] - A dovish tone from Powell could signal a 25-basis-point rate cut, potentially benefiting small-cap stocks [14] - Conversely, a hawkish signal could lead to negative reactions in risk markets [14]

Group 1 - Lowe's Companies, Inc. is set to release its second-quarter earnings results on August 20, with expected earnings of $4.24 per share, an increase from $4.10 per share in the same quarter last year [1] - The company is projected to report quarterly revenue of $23.96 billion, compared to $23.59 billion generated in the same quarter last year [1] Group 2 - In the first quarter of fiscal 2025, Lowe's reported mixed results, with shares gaining 2.2% to close at $256.36 [2] - Analysts have provided various ratings for Lowe's, with Citigroup maintaining a Neutral rating and lowering the price target from $253 to $242 [7] - Guggenheim reiterated a Buy rating with a price target of $300, while RBC Capital maintained a Sector Perform rating and cut the price target from $244 to $242 [7] - Baird maintained an Outperform rating and reduced the price target from $295 to $285, and DA Davidson maintained a Neutral rating, slashing the price target from $270 to $240 [7]

Market Overview - The Nasdaq experienced a significant drop, shedding -314 points (-1.46%), while the Dow and S&P 500 showed minor fluctuations, closing up +10 points (+0.02%) and down -37 points (-0.59%) respectively [1] - The decline in tech stocks has been a continuing trend, with Palantir (PLTR) falling -9.3% on the day and -16.5% over the past five sessions [2] Company Earnings - Toll Brothers (TOL) reported fiscal Q3 earnings of $3.73 per share, exceeding the Zacks consensus estimate of $3.59, with revenues of $2.88 billion, surpassing the projected $2.85 billion [3] - The company achieved its fourth earnings beat in the last five quarters, although gross margins remained steady at +27.5% [4] - Orders for Toll Brothers were down -4% compared to expectations of flat, and the average home sold was $974K, slightly below analyst expectations [4] Upcoming Earnings Reports - Anticipation is building for retail earnings reports from Target (TGT), TJX Stores (TJX), Lowe's (LOW), and Estee Lauder (EL), with expected year-over-year earnings changes of -18.7%, +5%, +3.2%, and -87.5% respectively [5] Federal Reserve Insights - The Federal Open Market Committee (FOMC) minutes will be released, highlighting that the Fed has maintained rates at 4.25-4.50% for the fifth consecutive meeting, with notable dissent from two voting members for the first time in over 30 years [6]

Mike, it's great to see you. So, a little bit of good, a little bit of bad here. The stock is going up.What was your read on the numbers. Yeah, the the miss was really small. Uh, you know, the same sort of sales missed by like 10 basis points and it was the best comp that they've had in about two years.A lot of the underlying metrics are showing, you know, better demand, not where we were, you know, many years ago during the pandemic, but but certainly a lot better than the post-pandemic era. And again, the ...

Core Viewpoint - Home Depot is considering raising prices on select merchandise to offset the costs associated with tariffs imposed by the Trump administration, marking a shift from its previous stance against trade-related price adjustments [1][12]. Pricing Strategy - The company indicated that price changes would be limited to specific product categories and characterized as measured rather than sweeping [1][3]. - CFO Richard McPhail confirmed that certain items would see price modifications in response to import duties [2][17]. Consumer Behavior - Home Depot reported mixed consumer behavior, with comparable store sales increasing by 1% while customer visits declined by 0.9% [4][11]. - The decline in customer visits is attributed to economic headwinds and elevated interest rates, leading homeowners to delay significant remodeling projects [3][9]. Market Dynamics - The residential real estate market's challenges have negatively impacted Home Depot's performance, as elevated property values and economic uncertainty have reduced demand for renovations [7][10]. - Despite home equity values doubling since 2019, homeowners are reluctant to take on debt for major improvement projects, even with favorable collateral values [10]. Strategic Focus - To counteract the decline in do-it-yourself demand, Home Depot is intensifying efforts to capture the professional contractor market, including expanded bulk purchasing options and enhanced support services [13][14]. - The company recently agreed to acquire building materials supplier GMS for $4.3 billion, reinforcing its commitment to serving professional builders [13][14]. Supply Chain Considerations - Approximately half of Home Depot's merchandise is sourced from domestic suppliers, which protects those products from international trade duties [4][16]. - The company aims to maintain a price leadership position in home improvement while managing the overall cost of projects for customers [17].

Core Viewpoint - Home Depot reported better-than-expected earnings, with investors showing mild optimism despite a generally weak earnings outlook for retail stocks this week [3][4]. Financial Performance - Home Depot's revenue for the second quarter was $45.28 billion, slightly below the expected $45.43 billion, while earnings per share (EPS) of $4.68 missed forecasts by 1 cent [5]. - Comparable store sales increased by 1%, marking the largest gain in nearly two years and a significant improvement from a decline of 3.3% in the same quarter last year [6]. Customer Insights - The company noted modest strength in its Do-It-Yourself (DIY) customer segment, with consumers engaging in smaller, seasonal home improvement projects, alongside strength in the Pro sales channel [7]. Guidance and Margins - Home Depot reaffirmed its guidance for the rest of the year, citing strong operating margins as a reason for optimism [8]. - Management acknowledged that while tariffs may increase prices on some products, over 50% of its products are sourced domestically and are not subject to tariffs [9]. Market Position and Economic Context - Home Depot and its competitor Lowe's are considered cyclical stocks, typically outperforming in a strong housing market but lagging in a tight market [10]. - Economic uncertainty is cited as the primary reason for consumers deferring large projects, indicating that broader investor confidence is crucial for stock performance [11]. Stock Forecast - The 12-month stock price forecast for Home Depot is $427.76, representing a 5.25% upside based on 26 analyst ratings [13]. - The stock has shown less volatility compared to larger tech stocks, maintaining a general uptrend since June [13]. - Technical indicators suggest that while the stock appears strong in the near term, it may be entering overbought territory [14][15]. Technical Analysis - Key near-term support levels are identified at around $400 and $391, with immediate resistance at the $409-$410 level [16]. - The stock is currently trading at approximately 26 times forward earnings, slightly above the sector average and its historical average [15].