Home Depot & Lowe's Earnings: Turnaround Time?

Home Depot (HD) and Lowe's (LOW) are poised to report earnings amid a challenging post-COVID demand environment, with both stocks mirroring each other's underperformance relative to the S&P 500 in 2025 due to subdued consumer spending on big-ticket home improvement items. While analysts anticipate stable but modest growth, HD has recently shown greater resilience in year-over-year sales and EPS, despite LOW's projected stronger top-line momentum and HD's 29% valuation premium. Upcoming guidance will be critical for investors seeking insights into consumer health and the sector's recovery.

Analysis

Home Depot (HD) and Lowe's (LOW) are poised for their upcoming earnings releases amidst a challenging consumer environment, marked by a post-COVID pullback in spending on big-ticket home improvement projects due to higher interest rates. This has resulted in both stocks underperforming the S&P 500 in 2025 with mirrored share price movements. Analyst estimates are currently stable, with HD projected to report a 5.4% EPS increase on 1.0% sales growth, emphasizing profitability. Conversely, LOW is expected to deliver stronger top-line momentum with 3.4% sales growth but a smaller 1.5% EPS gain. Historical performance supports a more resilient profile for HD, which has recently returned to positive year-over-year sales growth and saw a smaller comparable sales decline of 0.3% versus LOW's 1.7% drop. This operational strength is reflected in HD's valuation, which trades at a 25.3x forward earnings multiple—a historically consistent 29% premium to LOW's 19.6x. With both companies having previously reaffirmed their annual outlooks, the key market-moving factor will be their forward guidance, with HD's report providing a significant leading indicator for LOW.

Key Decisions for Investors

• Investors should prioritize the forward-looking guidance over the reported quarterly results, as management's outlook on consumer spending will be the primary catalyst for both stocks.
• Consider the distinct investment profiles: Home Depot offers demonstrated operational resilience and stronger profitability at a premium valuation, while Lowe's presents a value play contingent on achieving its higher projected sales growth.
• Utilize Home Depot's earnings release as a key signal for the sector; its performance and guidance will provide a critical read-through for Lowe's and could inform positioning ahead of its report.
• Maintain caution as both companies' prospects are heavily tied to the macroeconomic environment, specifically consumer tolerance for financing big-ticket purchases in a high-interest-rate climate.