Lowe's (NYSE: LOW) Q2 2026: Revenue Up 8.3% but Margin Pressure and Narrowed Guidance Weigh

Lowe's Companies (NYSE: LOW) posted Q2 2026 adjusted diluted EPS of $4.40, beating the $4.29 consensus estimate, while total sales climbed 8.3% year over year to $26.0 billion for the quarter ended July 31, 2026. Despite the top- and bottom-line beat, GAAP operating margin compressed 81 basis points and the company narrowed its full-year outlook to the lower end of prior guidance ranges.

Q2 2026 Results

• Revenue: $26.0 billion, up 8.3% from $24.0 billion in Q2 2025, driven by Pro and home services sales and a 15.7% increase in online sales; comparable sales rose 0.2%.
• GAAP diluted EPS: $4.27, flat versus the $4.27 reported in Q2 2025; adjusted diluted EPS rose 1.6% to $4.40, compared to prior-year adjusted diluted EPS of $4.33.
• GAAP operating income: $3.55 billion, up 2.3% year over year; GAAP operating margin contracted to 13.67% from 14.48% in the prior-year quarter.
• Net income: $2.4 billion, essentially flat versus $2.4 billion in Q2 2025.
• Free cash flow (six months ended July 31, 2026): $5.95 billion, derived from $7.01 billion in operating cash flow less $1.06 billion in capital expenditures.

What Drove the Results

Adjusted EPS of $4.40 beat the $4.29 consensus by $0.11, and total revenue of $26.0 billion outpaced the prior year by 8.3%. However, the margin story tells a more complicated picture: cost of sales rose 9.6% to $17.38 billion, pushing gross margin down 77 basis points to 33.04%, while depreciation and amortization jumped 25.2% to $572 million, including $96 million in intangible amortization tied to the acquisitions of Foundation Building Materials and Artisan Design Group. SG&A increased 6.7% to $4.46 billion. Together, these factors limited GAAP operating income growth to 2.3% despite the 8.3% revenue gain.

The adjusted EPS figure includes an $0.11 benefit from IEEPA tariff refunds, a one-time item that will not recur in the second half of fiscal 2026 under the company's updated guidance framework. Persistent weakness in discretionary DIY spending partially offset strength in Pro, online, and home services channels, keeping comparable sales growth to 0.2% for the quarter.

Updated Full-Year 2026 Outlook

Lowe's cut its full-year 2026 guidance, narrowing ranges to point estimates at the low end of prior forecasts. The company now targets total sales of $92.0 billion (previously $92.0 to $94.0 billion), comparable sales flat versus the prior year (previously flat to up 2%), and GAAP diluted EPS of approximately $11.75 (previously $11.75 to $12.25). Adjusted diluted EPS guidance was set at approximately $12.25, compared to a prior range of $12.25 to $12.75. Full-year capital expenditures are guided at up to $2.5 billion, and the outlook excludes any potential additional tariff refunds in the second half of 2026.

Wall Street View

Several analysts maintained their constructive ratings on Lowe's while lowering price targets following the Q2 report. Citigroup analyst Steven Zaccone maintained a Buy rating, cutting his target from $267 to $260. Telsey Advisory Group analyst Joseph Feldman kept an Outperform rating, reducing his target from $280 to $260. UBS analyst Michael Lasser maintained a Buy, trimming his target from $285 to $275. Truist Securities analyst Scot Ciccarelli held a Buy rating with a target trimmed from $255 to $254. Shares fell -1.21% on Thursday, August 20, 2026, while the S&P 500 declined 0.84%.

Investor Takeaway

The Q2 beat on adjusted EPS masks a deteriorating cost structure: with acquisition-related amortization running at $96 million per quarter and gross margin under pressure from higher cost of sales, the path to margin recovery depends on whether Pro and online channel growth can eventually offset persistent DIY softness. The narrowed full-year guidance removes the upper end of prior estimates and, critically, excludes any benefit from additional tariff refunds in H2 2026, making the $12.25 adjusted EPS target more contingent on operational execution than the headline number suggests.