Lowe's (LOW) Earnings Aug 19: Sales Up 9%, Earnings Down 2%

TL;DR

• Lowe's reports Q2 before the open on Wednesday, August 19, with the call at 9:00am ET, the same morning as Target and TJX.
• Consensus wants roughly $26.2 billion of revenue, up about 9.3%, and adjusted EPS near $4.25, down about 2% from $4.33. A retailer growing revenue by nine points and shrinking earnings is not a typo.
• The growth was bought. Lowe's closed the $8.8 billion Foundation Building Materials deal late in 2025, on debt. Last quarter total sales rose 10.5% while comparable sales rose 0.6%.
• My arithmetic on the gap: about 1% comps on a $24.0 billion base is roughly $250 million of organic growth. Consensus wants $2.2 billion more revenue. Call it $1.95 billion bought and $250 million earned.
• It lands three days after the consumer data cracked: July retail sales fell 0.6% and August sentiment dropped to 51.0.

The Board

Nine points of revenue growth, one point of it from the stores.

What Lowe's Is Expected to Report

Consensus sits at roughly $26.2 billion of revenue against $24.0 billion a year ago, and adjusted EPS near $4.25 against $4.33. Check which earnings line that is: the comparison is to last year's adjusted $4.33 rather than the GAAP $4.27, because Lowe's is stripping out acquisition amortisation on both sides.

Management affirmed the full year at Q1: sales of $92-94 billion, comparable sales flat to up 2%, adjusted operating margin 11.6-11.8%, adjusted EPS $12.25-12.75, and capex up to $2.5 billion. Q2 comps were pointed at roughly the midpoint of that comp range, so about 1%.

Where the Nine Points Come From

Lowe's agreed to buy Foundation Building Materials for $8.8 billion on August 19, 2025, exactly a year before this earnings date, and closed it in the fourth quarter. FBM is a distributor of interior building products, drywall and metal framing and ceiling systems, with more than 370 locations and about 40,000 Pro customers. It was financed with debt, and Lowe's is targeting a 2.75x leverage ratio by mid-2027, so it is running above that today.

Add the earlier Artisan Design Group deal and you get last quarter's shape: total sales up from $20.9 billion to $23.1 billion, a gain of 10.5%, on comparable sales of 0.6%.

Run the same split on Wednesday's consensus. A 1% comp on a $24.0 billion base is about $250 million. The Street wants $2.2 billion more revenue than last year. The residual, call it $1.95 billion, arrived with the acquisitions. That is my arithmetic rather than a company disclosure, and the exact split depends on new stores and on how Lowe's laps the ADG close, but the order of magnitude is not in doubt: roughly nine of every ten new dollars this quarter arrive by acquisition.

None of which makes the deal wrong. Buying distribution into the Pro channel is a coherent answer to a DIY customer who will not renovate at a 6.7% mortgage rate. It does mean the headline growth rate describes M&A, and the comp describes the business.

Why the Earnings Line Goes Backwards

Two things pull it down. Acquisition amortisation runs through the P&L, $96 million pre-tax in Q1 across FBM and ADG, and adjusted EPS excludes it while the interest on $8.8 billion of debt stays in. Then the margin: management guided Q2 adjusted operating margin lower year on year, because distribution is a thinner-margin business than selling paint at retail.

So the picture on Wednesday is a bigger, more leveraged, lower-margin company earning slightly less per share than the smaller one did. Whether that is a good trade depends entirely on the Pro attach rate over several years, which one quarter cannot settle.

The Bar Is Lower Than Target's

This is the useful contrast in a week when both report the same morning. Target arrives carrying a believed turnaround and a stock near its 52-week high, so it has to produce a second consecutive good quarter or the story breaks. Lowe's has been asked to prove much less. Consensus already has earnings going backwards.

That cuts both ways. A quarter that merely holds the full-year guide is enough for Lowe's and would not be enough for Target. But it also means a Lowe's miss says something about the category rather than the company, which is exactly why I would read it against Home Depot the morning before. If both DIY names disappoint on comps while Pro holds up, that is a housing story. If Lowe's comps hold and Home Depot's do not, it is a share story. The sector heatmap is the quickest way to see which one the tape picks, and the rest of the week's dates are in the earnings calendar.

I am not logging an options play here. I could not source a live chain or a settled spot for Lowe's at the time of writing, and a structure with no entry price cannot be graded afterwards.

The One-Line Read

Lowe's will report its fastest revenue growth in years and slightly lower earnings, because it bought the growth on credit. The comp, not the headline, is the number that describes the business.