Is Lowe’s Stock A Real Bargain After Its Recent Rally?
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Shares of Lowe’s Companies (LOW) climbed 25.7% between October 6 and November 4, 2026, yet the stock still trades below the median S&P 500 company’s multiple. The stock trades at 19.3 times earnings, compared with 22.9 for the median company. This discount could mark a sound retailer on sale, or a fair price for a business with a real problem. So what does a buyer get from Lowe’s for that lower multiple?
Buyers Of Lowe’s Get Growing Sales And Cash
A buyer gets a home improvement retailer whose sales are growing again. Revenue rose 8.2% over the twelve months ended July 31, 2026, following declines in each of the prior three twelve-month periods, though comparable sales grew far less in the latest quarter. Management said strong performance in Pro, Online and Home Services helped offset softer spending by do-it-yourself customers in the quarter ended July 31, 2026. Online sales grew 15.7% during that quarter.
Lowe’s also turns those sales into cash. The company generated $7.0 billion of free cash flow over the twelve months ended July 31, 2026, delivering a 5.5% yield on its market value. This cash more than covered the $2.69 billion it paid in dividends over the same twelve months. A buyer also pays 15.8% less per dollar of earnings than for the median S&P 500 company.
Lowe’s Profit Has Not Kept Pace With Its Sales
Lowe’s earned $2.4 billion of net income in the quarter ended July 31, 2026, the same as a year earlier, on an 8.3% increase in sales. Comparable sales rose just 0.2% for the quarter. On an August 19, 2026 call, management said discretionary DIY demand remains under pressure. Management also said the FBM and ADG acquisitions diluted its gross margin that quarter.
The longer record shows the same strain. Net income fell in each of the last two twelve-month periods, dropping to $6.64 billion in the twelve months ended July 31, 2026 from $6.93 billion two years earlier. Operating margin stood at 11.4% over the latest twelve months, below its 12.1% average across the last three twelve-month periods, which includes the latest.
The discount is to the market, not to Lowe’s own history. At the end of June in each of the last three years, Lowe’s stock traded at 18.1 to 18.6 times earnings, sitting below where it trades now. Buyers already pay a little more for each dollar of Lowe’s earnings than they did in those years, even though net income is lower.
Lowe’s Holds Prices And Lowers Full-Year Guidance
In July 2026, Lowe’s chose not to match some of its competitors’ price cuts on grills, patio and live goods. Management called the price cuts transitory and said matching them was not financially prudent. The company lowered its full-year 2026 outlook and now expects sales of about $92 billion, down from the $93 billion it guided in May 2026. Management cut its diluted earnings forecast to $11.75 a share, from $12.00, and now expects comparable sales to be roughly flat for the year.
Reported profit also had help. Tariff refunds accounted for $0.11 of the $4.27 of reported diluted earnings per share for the quarter ended July 31, 2026. Management has no further refunds in its outlook for the second half.
At $229.38 a share, a buyer is betting mainly that Lowe’s gets comparable sales growing faster without cutting prices, rather than betting the market has mispriced a sound business. Management expects third-quarter comparable sales in line with its roughly flat outlook for the year. Comparable sales are the number to watch when Lowe’s reports that quarter in November 2026.
Now You Know Lowe’s Companies. Here Is A Better Way To Invest
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