Housing on the Brink? Home Depot and Lowe’s Earnings Could Decide the Next Big Move

Home Depot and Lowe’s are set to report earnings this week in what could be a pivotal moment for the home improvement space. Home Depot (HD) reports Tuesday before the open, followed by Lowe’s (LOW) on Wednesday. With both stocks up double digits year-to-date—HD roughly +9% and LOW closer to +13%—investors are clearly positioning for stabilization in housing and consumer spending. The question now is whether results and guidance validate that optimism.

Starting with expectations , Home Depot is projected to report fiscal Q4 revenue of approximately $38.1–$38.3 billion, representing a year-over-year decline of roughly 3.7%–4.0%. Adjusted EPS is expected around $2.51–$2.53, down nearly 20% from the prior year. While revenue pressure reflects continued housing market softness and cautious DIY spending, analysts note that HD rarely misses on the top line and has beaten revenue estimates in three of the past four quarters.

Lowe’s, reporting Wednesday, is expected to post revenue of roughly $20.3–$20.4 billion, up nearly 10% year over year, with adjusted EPS around $1.93–$1.95, modestly up about 1%. Lowe’s benefited from a somewhat easier comparison and has shown improving operational discipline, but consensus EPS estimates have drifted slightly lower over the past month, signaling some caution heading into the print.

Guidance will likely matter more than the quarter itself. On December 9, Home Depot reaffirmed fiscal 2025 guidance and laid out preliminary fiscal 2026 expectations. The company expects FY26 sales growth of 2.5%–4.5%, with comparable sales projected flat to +2%, and adjusted EPS growth ranging from flat to +4%. In its “market recovery case,” HD sees total sales growth of 5%–6% and mid-to-high single-digit EPS growth if housing activity rebounds more sharply. Management has emphasized prudence in the near term but remains bullish on its longer-term algorithm once housing turnover improves.

For Lowe’s, full-year 2025 guidance calls for approximately $86 billion in revenue and adjusted EPS of around $12.25, with comparable sales expected flat for the year. Capex is expected at up to $2.5 billion. Like HD, Lowe’s has leaned heavily into the Pro customer, now about 30% of sales, as DIY demand remains uneven.

Several analysts see these earnings as potential validation events rather than downside catalysts. UBS suggests expectations are well managed, with the bar for HD comps around flat and LOW comps in the 1%–2% range. KeyBank’s Pro contractor survey points to stable near-term trends, though pros remain concerned about consumer confidence and are increasingly facing labor shortages tied to immigration enforcement. JPMorgan believes Q4 could represent a cyclical low point, with tax refunds, fading goods inflation, and persistent wage growth supporting improvement in 2026.

From a growth perspective, HD and LOW show notable differences. Based on recent data, HD is growing revenue roughly 7.5% year over year versus LOW at 0.6%, though forward revenue growth expectations for both are modest (HD ~3.9% vs. LOW ~2.6%). Over three- and five-year CAGRs, HD has outpaced LOW materially, with stronger historical top-line and EBITDA performance.

Valuation also diverges. HD trades at roughly 25–26x forward earnings versus LOW closer to 22–23x. EV/EBITDA multiples are similarly elevated for both (HD ~18x forward vs. LOW ~16x). HD commands a premium given its scale, Pro dominance, and historically stronger execution. However, with EPS growth expected flat to slightly positive for FY26, some argue the stock already discounts a recovery. Lowe’s appears modestly cheaper but has shown more volatile growth metrics over the past several years.

Profitability metrics remain solid for both, though HD’s scale advantages are notable. Price-to-cash-flow and price-to-book multiples skew higher for HD, reflecting its market leadership and capital allocation consistency. Meanwhile, LOW’s aggressive share repurchases have historically supported EPS, but margin execution remains a key watch item.

Macro remains the swing factor. Mortgage rates have hovered in the low-6% range and are expected to drift lower later in 2026. Even incremental declines in rates could stimulate housing turnover and remodel activity, which would disproportionately benefit Pro-heavy sales. Importantly, President Trump is expected to address housing affordability in his State of the Union speech this week. Any proposals tied to tax incentives, zoning reform, or mortgage relief could act as a near-term catalyst for housing-sensitive equities, including HD and LOW.

Tariffs add another layer of complexity. The administration’s move to impose a blanket 15% tariff following the Supreme Court’s ruling introduces renewed uncertainty around input costs. While both retailers have significant scale and supply chain flexibility, tariffs on materials such as lumber, appliances, steel, and imported fixtures could pressure margins if costs are not fully passed through. On the other hand, some tariff backfills have been structured in ways that lower effective rates for certain consumer categories, potentially mitigating inflationary impacts. The near-term risk is not just cost inflation but demand sensitivity—higher prices could further delay large-ticket DIY projects.

Key items to watch this week include: comparable sales trends and exit rates; Pro segment momentum; big-ticket discretionary demand; commentary on inventory and margin control; and any updates to FY26 guidance in light of housing and tariff developments. Investors will also listen for management tone—whether executives frame Q4 as a bottoming quarter or remain cautious into spring.

Options markets are pricing roughly a 4% move for HD and up to 5% for LOW following earnings. With both stocks having rallied to start the year amid a broader rotation out of tech and into consumer names, expectations may not be low, even if consensus estimates are conservative.

Ultimately, this week’s reports could shape the narrative for the entire home improvement space. If HD and LOW demonstrate stabilization in comps and reaffirm or modestly improve guidance, investors may lean into the housing recovery trade. If margins show stress from tariffs or consumer elasticity remains elevated, shares could give back some recent gains.

The broader setup suggests a sector at an inflection point. Housing turnover remains depressed, but aging housing stock, pent-up demand, tax stimulus, and potential rate relief offer medium-term support. The question investors must answer is whether that recovery is a 2026 story—or a 2027 one.