Lowe's Trades at Discount Despite Faster Profit Growth

The home improvement industry has faced challenges in recent years due to macroeconomic headwinds, including elevated interest rates and above-normal inflation. As a result, both Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) have underperformed the market.

Although Home Depot shares have slightly outperformed Lowe's stock over the past three years, Lowe's is trading at a 26% discount to its larger rival. This disparity in valuation is notable given that both companies' business models are almost identical.

Lowe's is set to report financial results for its fiscal 2026 second quarter on August 19. One key metric investors should pay attention to is same-store sales growth, which increased by 0.6% in Q1 and will be a positive sign if it continues to grow.

Additionally, the leadership team's commentary on cost synergies and integration progress following Lowe's acquisition of Foundation Building Materials last October and Artisan Design Group in June 2025 will provide valuable insight into the company's performance.