Lowe's (LOW -0.25%) will report its fiscal second-quarter earnings before the market opens on Aug. 19. Much like its chief rival, Home Depot, the home improvement and building-products retailer's business has been stuck of late as it contends with soft demand. While Lowe's reported better-than-expected results last quarter, management maintained a soft outlook, setting low expectations for the year.
Lowe's shares are down by about 10.5% year to date. Already trading at a cheap valuation compared to its main peer, the stock could become even more of a bargain if investors react negatively to the upcoming earnings release.
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Lowe's Q2 fiscal 2027 earnings preview
For the quarter that ended on Aug. 1, sell-side forecasts call for revenue of $26.2 billion and earnings of $4.24 per share. That would amount to year-over-year sales growth of 9.3% and a 2% decline in earnings.
NYSE: LOW
Key Data Points
Lowe's has made some large acquisitions since last year, including Foundation Building Materials and Artisan Design Group. While those purchases have increased its top line, sluggish same-store sales coupled with higher interest expense and lower margins have led to less-stellar near-term bottom-line results. That said, these acquisitions, part of the company's pivot toward a greater focus on the contractor market, could pay off in the long term.
The best move for long-term investors
At best, Lowe's may see a modest post-earnings surge; at worst, lackluster results could trigger another pullback. However, such a dip could create an attractive entry point for those looking to open a new position in the stock or increase an established one.
Analysts' longer-term earnings forecasts are for Lowe's earnings to grow 7.8% next fiscal year and by nearly 10% in the following fiscal year. Lowe's, trading for around 17 times forward earnings, versus a forward multiple of 23.5 for Home Depot, may have room for multiple expansion in the years ahead as well.
On top of that, consider Lowe's dividend, which at the current share price yields 2.3%. The company is also one of the rare Dividend Kings -- businesses that have raised their dividends annually for 50-plus years. A track record like that reflects a company that puts a priority on its dividend and has a business model that supports further growth in its payouts. Irrespective of how Lowe's shares perform in the near term, the ingredients remain in place for the stock to deliver steady total returns over an extended time frame.
