Core Insights - The company is undergoing a "comprehensive profitability reset" with significant volume deleverage expected in 2025 and a planned leadership transition [1][3][6] 2025 Results - Full-year sales were $4.5 billion, down 3% year-over-year, with a 1% decline excluding China [5][7] - Operating income decreased to $699 million, down 10%, and earnings per share (EPS) fell to $3.61, down 12% [5][7] - Margins were pressured by lower volumes, higher manufacturing costs, and tariffs, with operating margin at 15.7%, down 120 basis points [7][11] 2026 Outlook - Management guides for net sales growth of approximately flat to 2%, operating margin of about 14.5% to 15.5%, and EPS of $3.35 to $3.65 [4][13] - The outlook assumes continued tariff impacts, with mitigated tariff costs expected to be around $151 million in 2026, an increase of over $100 million year-over-year [14] - Free cash flow is projected to be about $400 million to $450 million, with capital expenditures of roughly $110 million to $140 million [16] Leadership Transition - Amit Banati has been appointed as CEO effective May, succeeding Nick Fink, who is departing [2][6] - The board has been evaluating succession continuously and views Banati as a proven leader with significant experience [2][3] Segment Performance - In Q4, sales in the Water segment were $617 million, down 4%, while the Security segment saw a 6% increase in sales to $166 million [10][15] - The Outdoors segment reported a 3% decline in sales to $295 million, with operating income down 24% [15] - The company has seen improved market share performance, outperforming the market by approximately 130 basis points for the full year, excluding China [12]

Group 1 - Lowe's is expected to report fiscal first-quarter earnings on May 21, 2025, with anticipated earnings of $2.89 per share and revenue of $21.03 billion, reflecting a 6% decrease in earnings and a 2% decline in sales year-over-year [1] - The company has a market capitalization of $130 billion, with reported revenue of $84 billion, operating profit of $10 billion, and net income of $7 billion over the last twelve months [2] - Approximately 70% of Lowe's sales come from do-it-yourself (DIY) customers, whose demand has weakened, impacting the company's performance [2] Group 2 - Historical data indicates that Lowe's stock has risen 55% of the time after earnings announcements, with a median one-day gain of 1.7% and a maximum increase of 10% [1][5] - Over the past five years, there have been 20 earnings data points for Lowe's, with 11 positive and 9 negative one-day returns, resulting in positive returns approximately 55% of the time [5] - The correlation between short-term (1D) and medium-term (5D) returns post-earnings can provide a less risky trading strategy, especially if a strong correlation exists [3][4]

Group 1 - Home Depot is expected to report fiscal first-quarter earnings on May 20, 2025, with anticipated earnings of $3.59 per share and revenue of $39.16 billion, indicating a 1% decline in earnings year-over-year and an 8% increase in sales compared to the previous year [1] - The company's current market capitalization stands at $370 billion, with $160 billion in revenue, $22 billion in operating profit, and a net income of $15 billion over the last twelve months [2] - Historical data shows that Home Depot's stock has fallen 55% of the time after earnings announcements, with a median drop of 2.5% in one day and a maximum decline of 9% observed [1][2] Group 2 - Home Depot's business model is challenged by its reliance on global sourcing, particularly from China, Canada, and Mexico, which exposes it to trade interruptions and tariffs [2] - The company has recorded 20 earnings data points over the last five years, with 9 positive and 11 negative one-day returns, resulting in positive returns occurring roughly 45% of the time [5] - The median of the 9 positive returns is 1.7%, while the median of the 11 negative returns is -2.5% [5] Group 3 - For event-driven traders, historical patterns can provide an advantage, allowing for preparation ahead of earnings or response to post-release movements [2] - A less risky approach involves examining the correlation between short-term and medium-term returns after earnings, identifying pairs with the highest correlation for trading strategies [3] - The performance of peers may influence Home Depot's post-earnings reaction, with pricing potentially beginning prior to the earnings announcement [6]