How Will Lowe's Stock React To Its Q1 Earnings?

Lowe's is set to release fiscal Q1 earnings on May 21, 2025, with analysts anticipating a 6% year-over-year decline in earnings to $2.89 per share and a 2% decrease in revenue to $21.03 billion. The company faces headwinds from global sourcing vulnerabilities, trade uncertainties, and softening demand from DIY customers, who account for approximately 70% of sales. Historically, Lowe's stock has risen 55% of the time following earnings releases; however, traders may also consider correlations between 1-day, 5-day, and 21-day post-earnings returns or peer performance for potential short-term strategies.

Analysis

Lowe's (NYSE: LOW) is poised to release its fiscal first-quarter 2025 earnings on May 21, with analysts anticipating a downturn, projecting earnings of $2.89 per share on $21.03 billion in revenue. These figures represent a 6% year-over-year decline in earnings from $3.06 per share and a 2% decrease in sales from $21.36 billion. The company, which reported $84 billion in revenue and $7 billion in net income over the past twelve months, currently holds a market capitalization of $130 billion. Key challenges include its global sourcing strategy, with significant reliance on China, Canada, and Mexico, rendering it vulnerable to trade disruptions and tariffs impacting critical product categories such as lumber, steel, and tools. Compounding these issues is a noticeable softening in demand from do-it-yourself (DIY) customers, who account for approximately 70% of Lowe's sales, as they exhibit increased hesitancy towards home remodel and upgrade investments. Historically, LOW stock has risen 55% of the time following earnings, with a median one-day increase of 1.7%; however, this rate drops to 50% over the last three years. The median observed negative one-day return stands at -3.7%, highlighting potential downside risk. The prevailing cautious sentiment, reflected by a sentiment score of -0.3 for LOW, aligns with these anticipated headwinds.

Key Decisions for Investors

• Investors should closely scrutinize Lowe's upcoming Q1 earnings call for management's strategies to mitigate global supply chain vulnerabilities and address the observed decline in DIY customer spending.
• Exercise caution ahead of the earnings release, considering the projected 6% year-over-year EPS decline and 2% revenue fall, and be prepared for potential stock price volatility, as indicated by historical median post-earnings moves of +1.7% on positive days and -3.7% on negative days.
• Evaluate positions in Lowe's based on the earnings outcome and forward guidance, noting that while the stock has historically risen 55% of the time post-earnings, the more recent three-year trend shows only a 50% positive reaction rate amidst current economic headwinds.