Wall Street Braces: Is Lowe’s About to Deliver a Harder Hit Than Home Depot?

Lowe’s will report fiscal third-quarter results tomorrow morning, and the stakes are unusually high. Home Depot's underwhelming earnings this week—marked by soft traffic, weak DIY demand, and no meaningful signs of a housing-related rebound—set a difficult backdrop for Lowe’s, whose revenue mix skews even more heavily toward DIY customers. With shares down roughly 13% this quarter and trading at 17x forward earnings, Lowe’s is approaching levels where valuation support typically emerges. But the fundamental reality remains: if Home Depot couldn’t find evidence of demand improvement, Lowe’s is unlikely to fare any better.

Analysts expect Lowe’s to post EPS of $2.95, up about 2% year over year, and revenue of $20.84 billion, representing roughly 3.3% growth. Comparable sales are expected to rise around 1%, slightly below the company’s 1.25% guidance. Stifel, one of the more cautious voices on the group, cut its Q3 Lowe’s EPS estimate to $2.89 and lowered comps to -0.4%, noting that underlying category trends have deteriorated since early fall. Piper Sandler takes a similarly muted view, expecting comps to land slightly below guidance given the absence of any inflection in big-ticket demand.

The Home Depot print looms large over tomorrow’s results. HD saw U.S. comps of just +0.1% against expectations of +1.25%, a 1.6% drop in customer transactions, and no sequential improvement in category demand. The company also blamed a weaker storm season and continued homeowner “deferral” behavior. Lowe’s is even more exposed to the discretionary, project-driven decisions that consumers are putting off. If HD’s core DIY business can’t stabilize, the odds are low that Lowe’s delivers an upside surprise.

Tomorrow’s report will hinge on a handful of key metrics. First, comp sales: analysts will focus on the underlying trend excluding hurricane-related noise, given the tough comparison against last year’s storm-related demand. Stifel believes that removing hurricane effects yields +0.6% underlying growth—better than the headline, but still sluggish given the steep multi-year declines in big-ticket projects. Second, traffic vs. ticket: HD showed negative traffic and small ticket gains that couldn’t offset volume weakness. Lowe’s must do better on volume to avoid the same narrative. Third, margins: investors expect slight gross-margin compression as Lowe’s integrates ADG and continues shifting mix toward Pro. Stifel argues hurricane costs may actually help margins year over year, but that effect may be small. Finally, guidance: management’s full-year outlook—flat to +1% comps and EPS of $12.20–$12.45—faces significant scrutiny given the lack of demand recovery in the category.

Investors will also look closely at commentary around the consumer. HD described homeowners as stuck in a “deferral mindset,” a phrase that has become shorthand for the industry’s stagnant demand environment. Lowe’s could reinforce or soften that message, but it is unlikely to contradict it. Housing turnover remains near generational lows, mortgage rates are still elevated, and high inflation has weighed on DIY budgets. It’s notable that even HD’s customer base—90% of whom own their homes—has not shown willingness to spend on large renovation categories. Lowe’s, with higher exposure to lower-ticket discretionary projects, may face even greater caution.

One area where Lowe’s may show relative strength is its Pro business, which has benefited from recent acquisitions. The Q2 report offered a glimpse: sales rose to $24 billion, comps were +1.1%, and digital engagement accelerated. The company emphasized expanding its Pro ecosystem, citing the acquisitions of ADG and Foundation Building Materials (FBM) as transformational moves that broaden product depth and improve fulfillment capabilities. While these deals will not fully offset DIY softness, they do help Lowe’s diversify its revenue base and build relationships with more inflation-resilient Pro customers.

Still, the Q2 report also highlighted the margin pressure that comes with these integrations. Operating margin slipped from 14.61% to 14.48% even as revenue modestly increased, and analysts expect similar trends in Q3 as ADG continues absorbing integration costs. Inventory discipline was sound, and free cash flow exceeded $3.7 billion, reinforcing Lowe’s solid balance sheet and liquidity. But the earnings trajectory remains heavily dependent on demand—something Lowe’s cannot control until the housing cycle normalizes.

The Street is divided on the near-term setup. Stifel remains cautious, arguing Lowe’s and HD both face a stagnant category with a delayed recovery, prompting estimate cuts through FY26 and FY27. Citi lowered its price target to $250 and now expects Q3 comps of +1%, slightly below consensus, citing weaker traffic and ongoing housing weakness. Barclays is more constructive, pointing to healthy consumer engagement and the benefit of easier comparisons next year, calling both stocks compelling opportunities for investors looking into 2026.

For now, Lowe’s shares sit near multi-month lows. The valuation—17x forward earnings and below historical averages—suggests the market has priced in a meaningful amount of pessimism. The problem is that HD’s results provided no evidence that fundamentals have turned the corner. If Lowe’s confirms the same trends, investors may conclude that even discounted valuations are not enough to call a bottom.

Ultimately, tomorrow’s report will answer a simple question: is Lowe’s experiencing the same stagnation as Home Depot—or something worse? Given its higher DIY exposure, softer traffic trends, and margin dilution from acquisitions, the burden of proof lies entirely with management. Investors will be listening closely for signs of stabilization, but for now, expectations remain appropriately guarded.