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Home Depot & Lowe’s: Buying the Earnings Dip Written by Jeffrey Neal Johnson on March 1, 2026 
Key Points - Both Home Depot and Lowe's exceeded Wall Street's earnings expectations by leveraging a surge in demand from professional contractors and essential repair projects.
- Management at Home Depot and Lowe's demonstrated confidence in future cash flows by maintaining their long track records of paying dividends to shareholders.
- Strategic investments in complex trade distribution and digital platforms are positioning these companies to lead the market when housing turnover eventually normalizes.
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 Wall Street has a famous habit of ignoring what just happened in favor of panicking about what might happen. On Feb. 25, 2026, the market offered a textbook example of this dynamic with retail giants The Home Depot, Inc. (NYSE: HD) and Lowe's Companies, Inc. (NYSE: LOW). Despite both companies reporting fourth-quarter earnings that exceeded analyst expectations, their stock prices slipped into the red shortly after. In the final trading days of February, Home Depot shares dropped approximately 2.3%, while Lowe's fell even harder, down nearly 5%. The culprit is not current performance, as both companies are executing well, but rather future caution. Management teams at both retailers cited a frozen housing market as the primary reason for conservative guidance in fiscal year 2026. The economic reality is simple but harsh: high mortgage rates have created a lock-in effect. Homeowners with low interest rates are refusing to move, pushing existing home sales to multi-decade lows. Without people moving, big-ticket discretionary renovation projects, like new kitchens and bathrooms, are being deferred. However, for long-term investors, the disconnect between strong operational execution and temporary macroeconomic fear represents a valuation reset. These companies are generating substantial revenue and profit in a worst-case housing environment. When the market inevitably thaws, they will likely be positioned for significant growth. While headlines focus on Tesla's car sales, tech analyst Jeff Brown says the real story is Tesla's role in a $25 trillion AI revolution — one that Nvidia's CEO himself has called a "multi-trillion-dollar future industry" — and he's uncovered a little-known stock 168 times smaller than Nvidia that could be positioned to ride this breakthrough. Click here now to see the full report Beating The Street in a Frozen Market If you look strictly at the financial scorecard for the fourth quarter of 2025, it is difficult to find the disaster implied by the stock price reaction. Both retailers cleared the hurdles set by Wall Street analysts, proving they can navigate a difficult environment. Home Depot Performance: Lowe's Companies Performance: - Adjusted EPS: Reported $1.98, edging out the consensus of $1.94.
- Revenue: Surged 10.9% year-over-year to $20.58 billion, beating estimates by nearly $250 million.
- Comparable Sales: Rose 1.3%, significantly outpacing the flat-to-negative expectations of many analysts.
It is worth noting a specific catalyst that helped these numbers: weather. Management at both companies noted that winter storms (specifically storms Fern and Gianna) drove up emergency spending on items such as generators and cleanup supplies. For Lowe's, this weather activity provided an estimated 50 basis point lift to comparable sales. While bears might argue this is a temporary boost, bulls see it as proof that these retailers are essential businesses that consumers rely on during crises. The Secret Weapon: Why Pros Are Saving the Day A clear trend emerged in the latest reports: the Pro customer is keeping the economy afloat. While the average homeowner is pulling back on discretionary DIY spending due to inflation and job worries, professional contractors are still buying. Both companies are aggressively pivoting their business models to capture this stable revenue stream. Home Depot’s Pro Ecosystem Home Depot reported that Pro sales outpaced DIY sales in the fourth quarter. The company is currently integrating SRS Distribution, a major acquisition designed to expand its reach into complex trade projects like roofing and landscaping. This move creates a sticky ecosystem in which contractors rely on Home Depot not just for lumber but also for job-site delivery, trade credit, and project management tools. Lowe’s Aggressive Expansion Lowe's is mirroring this strategy with high-stakes investments. The retailer reported double-digit growth in pro-heavy categories, such as paint primers. To further cement this growth, Lowe's recently acquired Foundation Building Materials (FBM) and Artisan Design Group (ADG). This aggressive expansion explains why Lowe's stock price is down harder than Home Depot’s today. While these acquisitions add billions in sales, they come with a short-term cost. Lowe's guidance assumes approximately 30 basis points of margin dilution in 2026 as they integrate these new businesses. Investors often dislike margin compression, but this appears to be a calculated risk. Lowe's is sacrificing short-term profitability to acquire higher, more recurring revenue streams from professional customers. By securing the Pro business now, it insulates itself from the volatility of the DIY market. Silver: 20% + 68%
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