What Could Derail Lowe’s Stock

Investors holding Lowe's Companies (LOW) shares have lost about 18% over the past twelve months, while the S&P 500 returned about 18%. Management noted cautious customers during its fiscal Q2 2026 earnings call. Executives also described heightened competitive pressure in July, driven by promotions that Lowe's chose not to match in full. So what was that pressure, and where did it come from?

Lowe's Rivals Cut Prices With Tariff Refunds In July

Competitors used their tariff refunds to lower prices late in fiscal Q2 2026, targeting seasonal categories most aggressively in July. Lowe's did not match some of those promotions. Management explained that the promotions were absent from the company's financial plan and that matching them was not financially prudent.

Comparable transactions fell 2.1% in fiscal Q2 2026. Management tied this decline to weather-sensitive outdoor and seasonal categories. However, a 2.3% rise in average ticket still kept comparable sales up 0.2%.

Shoppers are also hunting for value. Management said customers responded to value offers in live goods, hardscapes and outdoor power equipment.

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Lowe's Depends On A Single Segment

Retail Home Improvement brought in $84.1 billion in Lowe's fiscal 2025 (year ended Jan 2026), or 97% of revenue. This segment grew just 0.5% from the year before, leaving the business where rivals cut prices in July with little growth to spare.

Matching rival prices would come out of Lowe's profit. The company's operating margin was 11.4% over the past twelve months, down from 12.4% a year earlier. On $90.4 billion of sales over that period, each percentage point of margin is worth about $900 million of operating profit.

Lowe's share price appears to already assume a difficult stretch. The stock trades at 15.9 times earnings, compared with 22.3 for the S&P 500. Over the past ten years its P/E has ranged from 13.2 to 36.8, putting today's multiple near the low end.

Will Lowe's Rivals Keep Cutting Prices?

Management does not expect the price cutting to continue in the second half of the year. Executives called the cutting transitory, framing it as the result of competitors having tariff refund dollars. Based on the evidence so far, the risk is real but narrow, seen mainly in July and in seasonal goods.

The company also moved its full-year outlook to the bottom end of its earlier range, targeting about $92 billion of sales. For fiscal Q3 2026, management expects adjusted earnings per share to land about 7% below a year earlier. Lowe's comparable sales for fiscal Q3 2026 will be the measure to watch when the company reports that quarter.

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