LOW earnings analysis
What we found in LOW's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Lowe’s delivered 8.3% second-quarter sales growth to $25,956 million, supported by Pro, Online, Home Services and acquired businesses, but comparable sales were only up 0.2% as transactions declined 2.1%. Gross margin fell 77 basis points to 33.04% and operating margin fell 81 basis points to 13.67%, leaving GAAP diluted EPS flat at $4.27 despite adjusted EPS rising to $4.40. Cash generation remained strong at $7,009 million of operating cash flow and approximately $5,946 million of free cash flow, although working capital and higher interest expense remain concerns. The 10-Q introduced no new formal risk-factor changes or new sales/EPS guidance.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Sales grew despite weak DIY demand
- Second-quarter net sales increased 8.3% year over year to $25,956 million, while comparable sales increased 0.2%. Pro, Online and Home Services growth helped offset persistent DIY pressure.
- Acquired businesses broadened sales base
- Retail Home Improvement sales increased to $24,015 million from $23,821 million, while the Other segment increased to $1,941 million from $138 million following the FBM and ADG acquisitions.
- Strong cash generation funded deleveraging
- Six-month operating cash flow was $7,009 million and capital expenditures were $1,063 million, implying approximately $5,946 million of free cash flow and capex intensity of 2.2% of sales.
- Debt repayment and liquidity remained solid
- The company repaid $2,397 million of debt during the first six months, compared with $796 million in the prior-year period. Cash and cash equivalents were $3,172 million at July 31, 2026, with $5,000 million of undrawn revolver capacity.
- Adjusted EPS improved modestly
- Adjusted diluted EPS increased to $4.40 from $4.33 year over year, excluding $96 million of acquisition-related intangible-amortization expense in the quarter.
- Tariff refunds supported profitability
- The company recognized approximately $80 million of pre-tax IEEPA tariff refunds in the quarter, providing partial support to gross margin.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Margin pressure from acquisitions and fuel
- Gross margin declined 77 basis points to 33.04% from 33.81%, driven by the operational cost structure of the 2025 acquisitions and higher fuel costs; tariff refunds and credit revenue only partially offset the pressure.
- DIY demand and traffic remained weak
- Comparable customer transactions fell 2.1% to 219 million, while comparable average ticket rose 2.3% to $107.90. Management cited persistent discretionary DIY pressure, challenging weather and economic uncertainty.
- Higher debt burden raises interest costs
- Net interest expense increased to $374 million from $313 million in the quarter, and total current plus long-term debt was $37,556 million at July 31, 2026 versus $34,723 million a year earlier.
- Working capital consumed cash
- Six-month operating cash flow fell to $7,009 million from $7,610 million, while inventory increased to $17,737 million from $16,342 million. Management attributed the cash-flow decline primarily to working-capital timing.
- No new formal risk-factor changes
- The filing states there were no material changes to risk factors from the March 23, 2026 Annual Report. Separately, the final consent decree related to lead-safe installation practices requires a $12.5 million civil penalty.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $4.27
- Gross margin
- 33.04%
- Operating margin
- 13.67%
- Segment
- Retail Home Improvement: $24,015 million, up 0.8% year over year from $23,821 million; operating income was $3,546 million, or 14.77% of sales, versus 14.59%.
- Segment
- Other: $1,941 million versus $138 million year over year, reflecting the FBM and ADG acquisitions; operating income was $3 million versus a $7 million loss.
- Segment
- Merchandise divisions: Hardlines $7,952 million, down 0.7%; Home Décor $7,817 million, up 0.4%; Building Products $7,554 million, up 1.1%; Other $692 million, up 23.3%.
What they said about what is next.
The 10-Q does not provide new sales or EPS guidance. It states fiscal 2026 capital-expenditure guidance of approximately $2.5 billion and says liquidity is expected to remain adequate for the next twelve months. Prior numeric fiscal 2026 guidance was disclosed in the August 19, 2026 earnings release rather than this filing.
The filing reads worse than the one before it.
What came before.
- 10-Q · May 28, 2026
- Lowe's Q1 2026 results exceeded expectations with net sales of $23.1 billion, a 10.3% increase over Q1 2025. The diluted EPS was reported at $2.90, slightly lower than the $2.92 for the same quarter last year, impacted…
- 10-K · March 23, 2026
- Lowe's Companies, Inc. continues to strengthen its market position through strategic acquisitions and a focus on its Total Home strategy, which emphasizes servicing professional customers and enhancing omnichannel…
- 10-Q · November 26, 2025
- Lowe's reported Q3 2025 earnings with revenue slightly below expectations while EPS exceeded estimates. The company experienced a revenue decline compared to both the previous quarter and the prior year, attributed to a…
- 10-Q · August 28, 2025
- Lowe's Q2 2025 results showed stable growth, with revenues totaling $23.96 billion, a 1.6% increase from Q2 2024. Diluted EPS rose to $4.27, outperforming both the prior quarter and analyst expectations. Despite lower…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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