LOW: Pro Segment And Lock-In Effect Will Support Future DemandI updated the title after noticing it did not meet the 7-word minimum.

Analysts have trimmed their blended price target for Lowe's Companies by a few dollars, reflecting slightly higher discount rate assumptions and tempered near term guidance, despite expectations for improving revenue growth, stable margins, and long term demand supported by homeowners' lock in effect and rising home equity.

Analyst Commentary

Recent Street updates reflect a more nuanced stance on Lowe's, with modestly lower price targets but a generally constructive view on the company’s long term positioning and earnings power.

Bullish Takeaways

Bullish analysts maintain Buy and Outperform ratings even after trimming targets. This signals confidence that the recent pullback does not materially impair the long term return profile.
The lock in effect, where homeowners are incentivized to stay put to preserve low mortgage rates, is seen as a structural tailwind that should support steady demand for renovation and repair projects over time.
High and rising home equity levels are viewed as an important funding source for big ticket projects, supporting a thesis for reaccelerating comparable sales as macro headwinds ease.
Investments in productivity and the Pro contractor segment are expected to narrow the performance gap versus peers and drive market share gains, supporting margin expansion and multiple resilience.

Bearish Takeaways

Bearish analysts highlight that near term guidance implies softer Q4 trends than previously expected. This raises questions about the timing of a clear growth inflection.
Comparable sales decelerated amid tough hurricane comparisons, a pressured housing market, and consumer uncertainty, which could cap valuation until demand visibly improves.
While rate cuts and seasonal catalysts may help, there is concern that macro and housing pressures could persist longer than anticipated, delaying operating leverage and EPS growth.
Execution risk remains around closing the productivity gap and fully monetizing Pro investments, leaving limited room for missteps in an already competitive home improvement landscape.

What's in the News

Lowe's raised its full year 2025 total sales guidance to $86.0 billion, up from a prior range of $84.5 billion to $85.5 billion. This signals improved confidence in demand and execution (Corporate Guidance).
Smart home brand Aqara launched its Wi Fi enabled Smart Lock B50 across more than 500 Lowe's stores and on Lowes.com, expanding Lowe's connected home assortment with a hub free, app controlled security solution (Client Announcement).
SenesTech's Evolve Rat birth control soft bait became available on Lowes.com, broadening Lowe's pest control offerings with a non poison, reproduction targeting solution aimed at homeowners and DIY customers (Client Announcement).
Alpha Modus Corp. filed a patent infringement lawsuit against Lowe's in the U.S. District Court for the Eastern District of Texas, alleging Lowe's in store AI, computer vision, and retail media systems infringe six patents tied to real time analytics and personalized marketing (Lawsuits and Legal Issues).
Lowe's updated its large scale fixed income financing plans, adding multiple major banks, including J.P. Morgan, Citigroup, Goldman Sachs, Barclays, BofA Securities, Wells Fargo, and U.S. Bancorp Investments, as co lead underwriters across several multi hundred million to billion dollar debt offerings (Public Offering Lead Underwriter Changes).

Valuation Changes

Fair Value: Increased slightly from approximately $272.50 to about $272.97 per share, reflecting a modest uplift in intrinsic value estimates.
Discount Rate: Risen slightly from roughly 9.14% to about 9.28%, implying a marginally higher required return and modestly more conservative risk assumptions.
Revenue Growth: Increased moderately from around 5.38% to approximately 5.91%, signaling a somewhat stronger outlook for top line expansion.
Net Profit Margin: Edged down slightly from about 8.24% to roughly 8.21%, indicating a minimal compression in expected profitability.
Future P/E: Declined slightly from approximately 23.98x to about 23.84x forward earnings, suggesting a modestly lower valuation multiple applied to projected results.

Expansion into the Pro contractor market and integration of new digital capabilities position Lowe's for sustained growth, operational efficiency, and greater customer wallet share.
Market consolidation and scale advantages are set to enhance supplier bargaining power and cost efficiencies, supporting long-term margin improvement.
Major acquisitions, debt-related risks, tepid sales growth, labor pressures, and digital competition together threaten Lowe's operational margins, revenue growth, and long-term earnings potential.

Catalysts

About Lowe's Companies

Operates as a home improvement retailer in the United States.What are the underlying business or industry changes driving this perspective?

The acquisition of Foundation Building Materials (FBM) sharply accelerates Lowe's access to the large Pro contractor market-especially in key underserved regions (California, Northeast, Midwest)-unlocking new revenue streams, greater ticket sizes, and a larger share of the $250 billion Pro market, which is expected to drive above-market sales growth and improved diversification of revenue over the coming years.
Ongoing pent-up demand from delayed home improvement projects, combined with record-high aging U.S. housing stock and an estimated 18 million new homes needed by 2033, points to a significant runway for future growth in renovation, repair, and new construction; this will positively affect revenue and support sustained top-line expansion as the housing cycle recovers.
Continued investment in digital and omnichannel capabilities-including AI-powered tools for associates and new digital solutions brought through FBM's technology (e.g., MyFBM app, digital blueprint takeoff)-is expected to enhance operational efficiency, improve service levels for Pro and DIY customers, and drive incremental margin expansion through productivity gains.
Cross-selling opportunities arising from the integration of FBM and ADG (flooring, cabinets, countertops) enable Lowe's to offer comprehensive interior solutions to large builders, boosting wallet share per customer and supporting margin and earnings growth through higher attachment rates and bundled sales.
Market consolidation trends and Lowe's growing scale in both retail and distribution are poised to strengthen its bargaining power with suppliers, optimize procurement, and improve cost efficiencies, helping to defend and potentially expand both gross and operating margins over the long term.

Lowe's Companies Earnings and Revenue Growth

Lowe's Companies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Lowe's Companies's revenue will grow by 4.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.2% today to 8.9% in 3 years time.
Analysts expect earnings to reach $8.4 billion (and earnings per share of $15.27) by about September 2028, up from $6.8 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $7.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.5x on those 2028 earnings, up from 22.1x today. This future PE is greater than the current PE for the US Specialty Retail industry at 18.7x.
Analysts expect the number of shares outstanding to decline by 1.14% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.8%, as per the Simply Wall St company report.

Lowe's Companies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The success of Lowe's major acquisitions (FBM and ADG) hinges on complex integration and execution; failure to effectively merge operations, technology, and cultures could lead to higher costs, operational disruptions, and lower-than-anticipated synergy realization, negatively affecting net margins and long-term earnings.
The significant debt financing required for the $8.8 billion FBM acquisition will suspend share repurchases until 2027 and temporarily elevate leverage, increasing the company's exposure to interest rate changes and financial risk, which may weigh on earnings growth and shareholder returns.
Flat to low single-digit comparable sales guidance and management's cautious commentary on a "flat home improvement market" signal that housing turnover and discretionary big-project demand remain suppressed by high mortgage rates and affordability concerns-potentially limiting revenue growth despite favorable secular trends.
Persistent labor shortages and rising labor costs among both Pro customers and Lowe's workforce threaten to pressure operating margins and erode customer service advantages, possibly leading to margin compression and reduced earnings power long term.
Ongoing market risk from digital disruption, large supplier bargaining power, and direct-to-consumer competition (including e-commerce channel rivalry and major brands bypassing retailers) may threaten Lowe's in-store and online sales growth, undermining both revenue expansion and margin improvement initiatives.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $281.839 for Lowe's Companies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $325.0, and the most bearish reporting a price target of just $221.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $94.0 billion, earnings will come to $8.4 billion, and it would be trading on a PE ratio of 23.5x, assuming you use a discount rate of 8.8%.
Given the current share price of $269.03, the analyst price target of $281.84 is 4.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Digital Tools And Acquisitions Will Capture Underserved Pro Markets