Lowe's Companies (NYSE: LOW) reported first-quarter results that topped Wall Street expectations, yet the stock slipped in premarket trading as investors looked past the headline beat and focused on persistent headwinds in the U.S. housing market.
The home improvement retailer posted net sales of $23.08 billion for the quarter ended May 1, surpassing the analyst consensus of $22.97 billion, according to LSEG data. Adjusted earnings came in at $3.03 per share, also above the $2.97 expected. However, shares fell approximately 3% in premarket action, extending the stock's year-to-date decline to more than 9%.
Comparable Sales Edge Higher
Comparable sales, a key measure of underlying demand, rose 0.6% year-over-year. This growth was driven by a 15.5% surge in online sales, along with strength in appliances, home services, and the company's Pro segment, which serves professional contractors and tradespeople. CEO Marvin Ellison highlighted the company's "fourth consecutive quarter of positive comp sales" but acknowledged the "challenging housing macro" environment.
Housing Market Clouds Outlook
The results come during Lowe's most critical season, when spring repair and remodeling demand typically sets the tone for the fiscal year. However, that demand remains uneven. According to the Mortgage Bankers Association, U.S. mortgage rates rose to 6.56% in the week ended May 15, the highest level in seven weeks, adding a fresh drag on home sales and larger renovation projects.
Lowe's maintained its fiscal 2026 guidance, projecting sales in the range of $92 billion to $94 billion, comparable sales growth of flat to up 2%, and adjusted diluted earnings of $12.25 to $12.75 per share. The unchanged outlook disappointed some investors who had hoped for an upward revision following the beat.
Market Reaction and Analyst Views
The stock's decline reflects a broader concern that a beat on the bottom line is not enough to reassure investors about the trajectory of the housing market. D.A. Davidson analyst Michael Baker, who rates Lowe's as Neutral with a $275 price target, noted that the lack of a comparable sales beat and the company's performance being "only in line with Home Depot" could pressure the stock, as reported by Barron's.
Lowe's larger rival, Home Depot (NYSE: HD), delivered a similar message a day earlier. Home Depot reported first-quarter sales of $41.8 billion, up 4.8%, with comparable sales growth of 0.6% and adjusted earnings of $3.43 per share. The company also reaffirmed its 2026 guidance. CEO Ted Decker described demand as "relatively similar" to fiscal 2025, despite greater consumer uncertainty and housing affordability pressures.
Looking Ahead
The risk for Lowe's is that its clean spring execution may not be sufficient to offset the drag from high mortgage rates and slow housing turnover. If consumers continue to delay big-ticket projects such as kitchen and bath remodels, flooring, and other renovations, gains in the Pro segment, online sales, and appliances may only partially compensate, rather than drive a stronger recovery.
For now, Lowe's is delivering a familiar message to Wall Street: the company can manage costs and defend its outlook, but it cannot accelerate the housing cycle. Investors will be watching closely for any signs of a turnaround in the housing market as the spring season progresses.
