TenQ

The Lowe's story

Lowe's is the second-largest home improvement retailer, expanding beyond its homeowner base as it tests whether larger Pro customers and installation services can offset weak discretionary DIY spending.

Written from Lowe's's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $187.66share price, last close
  • $105.3Bmarket value
  • 21/36TenQ Score checks passed
  • 4.2%growth a year the price assumes

The story in brief

  • A broader Pro business. The approximately $8.8 billion Foundation Building Materials acquisition extends Lowe's into larger residential and commercial projects alongside Artisan Design Group.
  • Growth remains uneven. In the quarter to July 2026, online sales rose 15.7%, but comparable sales increased only 0.2% as discretionary DIY spending remained under pressure.
  • Cash supports the transition. Lowe's generated $7.0 billion in free cash flow over the last twelve months, while total debt of $35.6 billion exceeded cash and short-term investments of $3.4 billion.

What drives the business

  • Lowe's Total Home strategy combines its homeowner business with a push into professional customers, online shopping and installation services, with Foundation Building Materials and Artisan Design Group extending its reach to larger Pros.
  • Lowe's completed the Foundation Building Materials acquisition in October 2025, adding a distributor of drywall, metal framing, ceiling systems and other interior building products with over 370 locations serving 40,000 Pro customers.
  • Foundation Building Materials generated approximately $6.5 billion in pro forma revenue in 2024, giving the expansion a substantial business base beyond Lowe's traditional focus on small to medium sized Pros.
  • Lowe's operated 1,761 stores as of July 31, 2026, and demand across its business depends on housing turnover, the age of homes, disposable income and residential and commercial construction.
  • Sales reached $26.0 billion in the quarter to July 2026, compared with $24.0 billion in the prior-year quarter, while Pro, home services and online growth supported its fifth consecutive quarter of positive comparable sales.

What the price assumes

At $187.66, the reverse DCF implies free cash flow after stock pay grows 4.2% a year for ten years, using a 10.2% discount rate.

Lowe's delivered 7.1% annual growth in that measure over the last 10 years, compared with the TenQ check's 5.6% bar, which slows the historical record halfway to 4%.

The implied growth rate is below both measures, although revenue growth of 8.2% over the last twelve months follows an annual pace of -3.8% over the last three years.

Value LOW on your own assumptions

What could change the story

  • Persistent discretionary DIY weakness leaves the larger Pro business carrying more of the growth burden, while slower housing turnover or construction could also affect professional demand.
  • Revenue growth has not translated into broad profit growth, with profit growth of -3.1% over the last twelve months and Lowe's passing only 2 of 6 TenQ Growth checks.
  • Negative equity and liabilities equal to 113.3% of assets, versus 110.8% five years ago, make the balance sheet an important constraint on the expansion.
  • The near-term liquidity ratio of 1.10 falls below the TenQ check's 1.50 bar despite positive free cash flow.
  • Adjusted diluted earnings per share of $4.40 in the quarter to July 2026 excluded $96 million in acquisition-related expenses and still included an $0.11 tariff refund benefit, complicating comparisons of underlying earnings.

What to watch next

  • The next releases will test Lowe's fiscal 2026 outlook for $92.0 billion in total sales and flat comparable sales, particularly whether Pro and home services continue to offset DIY pressure.
  • Operating margin against guidance of 11.2%, adjusted operating margin against 11.6%, and adjusted diluted earnings per share against approximately $12.25 will show whether sales growth is supporting profitability.
  • Free cash flow, debt and acquisition-related expenses will indicate how the expanded business is funding itself alongside planned capital expenditures of up to $2.5 billion and approximately $1.6 billion in net interest expense for fiscal 2026.

Sources

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