Lowe's reported Q1 FY2026 revenue of $23.1B (+10.3% YoY) and adjusted EPS of $3.03 (+3.8% YoY), both beating Street estimates. Comparable sales rose a modest 0.6%, but online sales surged 15.5%, demonstrating the payoff from the company's Total Home Strategy digital investments. The stock is trading near its 52-week low of $208 -- down 24% from its February high of $293 -- creating what we believe is an attractive entry point for a Dividend King with 62 consecutive years of dividend increases. The $8.8B Foundation Building Materials and $1.31B Artisan Design Group acquisitions are strategically sound, scaling the Pro and new construction verticals, though they are diluting gross margins near-term (-70bps). CEO Marvin Ellison described this as the most difficult housing market since the financial crisis, yet maintained full-year guidance of $92-94B revenue and $11.75-$12.25 adjusted EPS. With the stock at 18x forward earnings -- a meaningful discount to Home Depot's 21x and below its own 5-year average -- and a 2.17% dividend yield backed by a sustainable 39% payout ratio, we rate LOW a BUY with a $275 price target representing 24% upside.
| Company | price | marketCap | peTrailing | peForward | revenueGrowthTTM | grossMargin |
|---|---|---|---|---|---|---|
| Lowe's Companies | 221.05 | $123.8B | 18.8 | 18 | +10.3% | 32.7% |
| Home Depot | 363.5 | $355B | 23.5 | 21.2 | +4.3% | 33.4% |
| Floor & Decor | 85.2 | $7.2B | 32.1 | 26.4 | +6.8% | 42.1% |
| Sherwin-Williams | 335 | $84.5B | 30.8 | 27.1 | +3.2% | 48.6% |
| Tractor Supply Co. | 248 | $26.8B | 22.1 | 20.5 | +2.8% | 36.5% |
| Scenario | Price Target | Assumptions | Probability |
|---|---|---|---|
| Bull Case | $325 | Housing recovery as mortgage rates normalize below 6%; Pro segment accelerates with FBM synergies reaching $400M+; online penetration doubles to 20%; comp growth inflects to 3-5% with margin expansion to 12.5% operating margin. Multiple re-rates to 22x forward. | 25% |
| Base Case | $275 | Flat-to-modest comp growth of 0-2% in a sluggish housing environment; FBM and Artisan acquisitions contribute incremental revenue but compress margins near-term; dividend maintained and raised 5-8%; operating margin stabilizes at guided 11.2-11.4%. Multiple holds at 18-19x forward. | 50% |
| Bear Case | $190 | Housing recession deepens as rates remain elevated above 7%; tariffs on building materials and appliances compress gross margins 150-200bps; Pro segment integration stumbles; negative comp sales of -2% to -4%. Multiple contracts to 14x forward on earnings downgrade cycle. | 25% |