LOWES COMPANIES INC (LOW) Q3 2026 Earnings Summary

Executive Summary

Q3 2026 delivered slight top-line growth and solid bottom-line execution: revenue $20.81B (+3.2% y/y) with comparable sales +0.4%; adjusted EPS $3.06, exceeding consensus, while GAAP EPS was $2.88 . EPS beat was driven by gross margin expansion, credit income, and SKU rationalization; revenue was roughly in line with consensus . EPS: $3.06 vs $2.95*; Revenue: $20.81B vs $20.84B*.
Management raised full-year sales to ~$86.0B (from $84.5–$85.5B) to include ~Q4 FBM contribution, held adjusted EPS at ~$12.25, and trimmed adjusted operating margin to ~12.1% (from 12.2–12.3%) as FBM/ADG dilute margins near term .
Strategic progress: Pro, online (+11.4%), and home services (double-digit comps) outperformed; AI assistants (Milo/Milo Companion) are scaling and improving conversion and customer satisfaction; FBM closed in October to deepen Pro capabilities and urban fulfillment .
Near‑term setup: Tariff headwinds ramp through Q4 and into 1H26; November quarter‑to‑date comps positive heading into holiday, providing a potential sentiment catalyst alongside integration updates and any signs of HELOC‑funded project recovery .

What Went Well and What Went Wrong

What Went Well
- Adjusted EPS beat on margin quality: adjusted EPS $3.06 grew ~6% y/y; gross margin expanded 50 bps; adjusted operating margin +10 bps y/y on credit outperformance and SKU rationalization sell-through .
- Digital and services momentum: online sales +11.4%; home services delivered double-digit comps across windows/doors, HVAC, water heaters, kitchens/bath, and window treatments .
- AI at scale improving conversion/CSAT: Milo/Milo Companion answer ~1M questions/month; online conversion more than doubles with Milo; in‑store CSAT +200 bps when associates use Milo Companion .
What Went Wrong
- Volume softness and storm lap: transactions -3% as DIY demand remained pressured; ~100 bps sales headwind from lapping prior-year hurricanes concentrated in October .
- Margin dilution from M&A: FBM/ADG dilute FY25 adjusted operating margin by ~20 bps and ~50 bps annualized in 2026 as integrations proceed .
- Tariffs and macro uncertainty: management flagged tariff ramp in Q3 with continued pressure in Q4 and wrap into 1H26; larger discretionary remains interest‑rate sensitive .

Financial Results

Metric	Q3 2025 (Prior Year)	Q2 2026 (Prior Qtr)	Q3 2026 (Actual)	Q3 2026 Consensus
Revenue ($B)	$20.17	$23.96	$20.81	$20.84*
GAAP Diluted EPS ($)	$2.99	$4.27	$2.88	$2.95*
Adjusted Diluted EPS ($)	$2.89	$4.33	$3.06	$2.95*
Gross Margin %	33.69%	33.81%	34.19%	N/A
Operating Margin % (GAAP)	12.57%	14.48%	11.92%	N/A
Operating Margin % (Adj.)	N/A	N/A	12.4%	N/A

Values with * are from S&P Global consensus. Values retrieved from S&P Global.

KPIs and Operational Metrics

KPI	Q3 2025	Q2 2026	Q3 2026
Comparable Sales YoY	N/A	+1.1%	+0.4%
Online Sales Growth YoY	N/A	N/A	+11.4%
Average Ticket YoY	N/A	N/A	+3.4%
Transactions YoY	N/A	N/A	-3%
Monthly Comps (Aug/Sep/Oct)	N/A	N/A	+2.5% / +0.9% / -2.6%
Store Count (period-end)	N/A	1,753	1,756
Inventory ($B)	$17.57	$16.34	$17.18

Non-GAAP adjustments in Q3 2026 included $129M pre-tax (FBM/ADG transaction costs and amortization), adding $0.18 to adjusted EPS; prior-year Q3 included a $54M pre-tax gain from the Canadian business contingent consideration (reduced adjusted EPS) .

Guidance Changes

Metric	Period	Previous Guidance (Q2)	Current Guidance (Q3)	Change
Total Sales	FY2025	$84.5–$85.5B	~$86.0B	Raised (FBM Q4 contribution)
Comparable Sales	FY2025	Flat to +1%	Flat	Lowered
Adjusted Operating Margin	FY2025	12.2%–12.3%	~12.1%	Lowered (FBM/ADG dilution)
Net Interest Expense	FY2025	~$1.3B	~$1.4B	Raised
Effective Tax Rate	FY2025	~24.5%	~24.0%	Lowered
Adjusted Diluted EPS	FY2025	~$12.20–$12.45	~12.25	Midpoint maintained
Capital Expenditures	FY2025	~ $2.5B	Up to $2.5B	Maintained
Dividend (Declared)	Next Payment	$1.20/sh payable Feb 4, 2026	$1.20/sh	Maintained

Additional FY26 color: FBM/ADG to dilute adjusted operating margin by ~50 bps annualized (20 bps in FY25; ~30 bps wrap in FY26); deleveraging plan to ~2.75x adj. debt/EBITDA by mid‑2027; share repurchases paused during integration .

Earnings Call Themes & Trends

Topic	Q1 2026 (May)	Q2 2026 (Aug)	Q3 2026 (Nov)	Trend
Macro/Housing	Comps -1.7% amid weather; outlook affirmed	Comps +1.1%; ADG closed; guide updated	Consumer cautious; HELOC funding potential; November-to-date comps positive	Stabilizing with cautious optimism
Pro Customer	Mid-single-digit Pro growth	Pro growth continued	Pro growth; Transform Pro “flywheel,” stable backlogs; FBM to bolster fulfillment	Improving
Online/Marketplace	Not highlighted	—	Online +11.4%; marketplace exceeding early targets	Improving
AI/Technology	Launched Milo Companion; first at-scale AI tool	—	1M Q&A/month; conversion more than doubles; CSAT +200 bps; OpenAI 100B token milestone	Scaling
Tariffs/Supply Chain	—	—	Tariffs ramped in Q3; continue in Q4 and wrap into 1H26	Worsening near term
Categories	—	Appliances strength	Positive comps in appliances, flooring, paint, kitchens/bath; building products and tools solid	Broad-based improvement
M&A Integration	—	ADG closed	FBM closed Oct; 370 locations; ~50 bps FY26 margin dilution; cost/revenue synergies	Early integration

Management Commentary

“Adjusted operating margin expanded approximately 10 basis points, leading to adjusted diluted earnings per share of $3.06… We delivered online sales growth of 11.4%… double-digit growth in home services and continued growth in Pro sales.” — CEO prepared remarks .
“When our customers engage with Milo online, the conversion rate more than doubles… customer satisfaction scores increase 200 basis points [with Milo Companion]… Lowe’s [earned] OpenAI’s 100 billion token milestone award.” — CEO on AI .
“We recognized $105 million in pre-tax transaction costs [FBM financing]… issued $5 billion of bonds (4.38% coupon) and borrowed $2 billion term loan; remaining $1.8 billion cash on hand… Adjusted diluted earnings per share of $3.06, exceeding our expectations.” — CFO .
“Adjusted debt to EBITDA was 3.36x… steady deleverage to our 2.75x target by mid‑2027.” — CFO .
“FBM and ADG to negatively impact consolidated adjusted operating margin by approximately 50 basis points [annualized].” — CFO .

Q&A Highlights

Near-term trading color: November quarter-to-date comps positive with early holiday strength across seasonal, tools and appliances; promotional cadence consistent with prior years .
2026 outlook markers: excluding storms, one- and two-year comps are accelerating; cautious but optimistic on HELOC-funded projects as rates fall; more detail in February .
M&A margin math: FY25 ~20 bps adjusted operating margin dilution (split ~10 bps FBM/~10 bps ADG); FY26 ~50 bps annualized dilution (30 bps wrap) weighted to gross margin; integration prioritizes “do no harm” with shared ERP platform .
Tariffs and pricing: Margins benefited from lapping storm costs, credit revenue, SKU exits; tariff costs tracking expectations with modest like‑for‑like pricing increases; tariff wrap persists into 1H26 .

Estimates Context

Q3 2026 vs consensus: Adjusted EPS $3.06 vs $2.95* (beat); Revenue $20.81B vs $20.84B* (roughly in line). Estimates based on 18 EPS and 15 revenue contributors [GetEstimates].
Implications: Modest top-line variance but quality of margin and expense control drove the EPS beat; Street models likely nudge FY25 revenue higher (to reflect FBM) while trimming FY25–26 margin assumptions for acquisition dilution and tariff wrap .