Lowes' Hidden Growth: Can It Keep Up Without Home Building Rebound

Lowe's Companies (LOW) has been growing revenue faster than its peers in the home improvement industry, but its stock price hasn't kept pace. In fact, it is the cheapest of the five companies ranked against it on earnings. This unusual combination suggests that the market may be reading Lowe's growth differently.

Lowe's grew revenue 8.2% over the past twelve months, outpacing Home Depot (HD), its main competitor in the industry, which grew just 2.5%. Despite this strong growth, Lowe's operating margin is lower than Home Depot's at 11.4% versus 12.4%, respectively.

The company attributes its growth to acquisitions, including Foundation Building Materials and Artisan Design Group, which sell into residential construction. However, management notes that home building is currently at multi-year lows, which could impact future growth. Online sales grew 15.7% in the latest quarter, driven by the company's online AI agent, Mylow.

Lowe's guides fiscal 2026 to sales of around $92 billion with flat comparable sales, which could be a cause for concern if the housing market remains stagnant. The company also expects rivals to continue discounting prices due to tariff refunds, which could put pressure on Lowe's margins.