Home Depot & Lowe's Earnings: Turnaround Time?

Home improvement retailers Lowe's and Home Depot are reporting earnings this week, navigating a challenging market impacted by higher interest rates and reduced consumer spending on big-ticket items. Analysts project Home Depot to achieve 5.4% EPS growth on 1.0% sales growth, exhibiting more resilient year-over-year trends and trading at a 25.3x forward P/E, a 29% premium to Lowe's 19.6x. Lowe's is expected to see 1.5% EPS growth and 3.4% sales growth, though its comparable store sales declined more significantly at 1.7% versus Home Depot's 0.3%. Both companies reaffirmed their full-year outlooks, making post-earnings guidance critical for assessing their trajectory in this recovering sector.

Analysis

Home Depot (HD) and Lowe's (LOW) are navigating a challenging consumer environment marked by reduced spending on big-ticket items due to higher interest rates, which has led both stocks to underperform the S&P 500 in 2025. Ahead of their earnings reports, analyst expectations highlight a key divergence: Home Depot is projected for superior profitability with a 5.4% EPS increase on 1.0% sales growth, whereas Lowe's is forecast for stronger top-line momentum with 3.4% sales growth but only a 1.5% rise in EPS. This is consistent with recent trends where Home Depot's year-over-year sales growth has turned positive and its comparable store sales saw a smaller decline of 0.3% versus Lowe's 1.7% drop. In contrast, Lowe's year-over-year sales have been negative since early 2023. The market appears to price in Home Depot's operational resilience, affording it a 25.3x forward earnings multiple, a 29% premium to Lowe's 19.6x, a valuation gap that is noted to be historically consistent. With both companies having reaffirmed their current-year outlooks, the upcoming forward guidance will be the critical catalyst for share price movement, with Home Depot's release expected to provide significant read-throughs for Lowe's.

Key Decisions for Investors

• Investors must decide between Home Depot's demonstrated operational resilience and higher expected profitability versus Lowe's more attractive valuation and stronger projected top-line growth.
• Given that both companies recently reaffirmed their annual outlooks, pay close attention to any revisions in their upcoming forward guidance, as this will be the primary driver of post-earnings stock performance.
• Monitor the comparable store sales metric as a key performance indicator, noting that Home Depot's smaller recent decline suggests a stronger underlying business at present.
• Consider that Home Depot reports first, and its results and commentary on the consumer will provide a significant directional indicator for Lowe's stock ahead of its own earnings release.