- Strong FY2025 Sales Growth: Fiscal year 2025 sales reached $86.3 billion, with a 0.2% increase in comparable sales, and adjusted EPS rose 2% to $12.28.
- Operational Efficiency Gains: Free cash flow totaled $7.7 billion in 2025, and $1 billion in productivity savings are targeted for 2026 through PPI initiatives.
- Pro Segment and Digital Growth: Pro sales growth outpaced expectations, while online sales surged 10.5% in Q4, with record Black Friday/Cyber Monday performance.
- Strategic Acquisitions Integration: $3 billion spent on acquiring ADG and FBM, expected to generate $8 billion in 2026 revenue and accretive EPS growth.
- 2026 Outlook Confidence: Sales guidance of $92–$94 billion and adjusted EPS of $12.25–$12.75, with margin expansion to 11.6–11.8% despite flat market expectations.
Operational Highlights
In terms of business performance, Lowe's Pro results showed growth, driven by a transformed offering, investments in inventory, and enhanced service levels. Online sales grew 10.5% in the quarter, with the company setting new sales records on Black Friday and Cyber Monday. Home services delivered high single-digit growth, driven by digital tools and enhanced service. The company's Chief Financial Officer, Brandon Sink, noted that the recent acquisitions of Foundation Building Materials and Artisan Design Group are on track, with integration efforts focused on capturing cost synergies.
Strategic Initiatives
Lowe's has made significant investments in its Pro Extended Aisle and Total Home strategy. The company launched a full shelf replenishment initiative, using real-time data to identify out-of-stocks and prioritize restocking. This has improved the associate and customer experience. Lowe's Pro Extended Aisle efforts are exceeding expectations, with new suppliers and markets being added weekly.
Outlook and Guidance
For 2026, Lowe's expects sales ranging from $92 billion to $94 billion, with comparable sales flat to up 2%. The company anticipates operating margin in a range of 11.2% to 11.4% and adjusted operating margin in a range of 11.6% to 11.8%. Lowe's guides 2026 core business EBIT margin with a range that reflects a 2% comp, with the low end assuming flat comp and the high end assuming upside traction from sales-driving initiatives.
Valuation Metrics
With a P/E Ratio of 22.1 and an EV/EBITDA of 14.38, the market appears to be pricing in moderate growth expectations. The company's ROE is negative, but ROIC stands at 20.42%, indicating a strong return on invested capital. The Dividend Yield is 1.81%, and Free Cash Flow Yield is 5.19%, suggesting a relatively attractive return for income investors.