Lowe's Companies, Inc. LOW has been a prominent player in the home-improvement retail space, known for its commitment to customer satisfaction, innovation and operational efficiency. As the company navigates a rapidly evolving market, LOW continues to focus on key strategies aimed at driving long-term growth and expanding its market presence. 

Let us analyze the fundamentals of Lowe’s to understand the key drivers behind its market position and financial resilience.

Lowe’s Strategy: Driving Growth Through Innovation

Lowe’s has revealed its ambitious 2025 Total Home Strategy aimed at driving sustainable growth and increasing market share. This strategy focuses on five key pillars, driving Pro penetration, accelerating online sales, expanding home services, creating a robust loyalty ecosystem and maximizing space productivity. To support these initiatives, Lowe’s is introducing an advanced AI framework, designed to enhance customer experience and boost operational efficiency. 

Moreover, the company is launching the first product marketplace in the U.S. home improvement industry, providing customers with a wider range of options. The Pro loyalty program is being revamped as MyLowe’s Pro Rewards, offering tailored benefits for professional customers. Furthermore, Lowe’s is introducing the Pro Extended Aisle to streamline and expand jobsite delivery services, ensuring greater convenience and efficiency for Pro customers.

To drive long-term growth and attract both Do-It-Yourself (DIY) and Pro customers, Lowe’s plans to open 10-15 new stores annually in the next several years, focusing on fast-growing U.S. markets. In addition to physical expansion, Lowe’s aims to strengthen its presence in rural areas by extending the company’s specialized rural assortments to 150 more stores. This initiative will offer customers a comprehensive range of products tailored for both farm and home needs, effectively bringing the total number of rural-focused stores to nearly 500.

Lowe’s aims to achieve approximately $1 billion in annual cost savings through its Perpetual Productivity Improvement initiatives. At the same time, Lowe’s remains committed to its capital allocation strategy, balancing strategic growth investments with consistent shareholder returns through dividends and share repurchases.

Areas Where LOW Needs to Focus on in 2025

Lowe’s DIY segment has experienced continued softness, which has impacted overall sales performance. This decline in DIY spending indicates a broader shift in consumer behavior, as many are now prioritizing essential expenditures over discretionary home improvement projects. Cautious spending habits have become more evident, with consumers increasingly delaying major purchases, particularly in areas like flooring, kitchens, deco and bath products. 

Lowe’s management disclosed that approximately 40% of its cost of goods sold is sourced from outside the United States, exposing the company to potential risks from tariff increases under the incoming trade regime. These policy changes could impose significant cost pressures, especially on price-sensitive product categories. While Lowe’s has diversified its supply chain in recent years, the possibility of higher sourcing costs could further squeeze profit margins and limit the company’s flexibility in adjusting prices to maintain competitive positioning.

LOW’s Price Performance

In the past six months, Lowe's shares have gained 7.5% compared with the industry and the S&P 500’s growth of 10.8% and 9.2%, respectively. LOW’s major competitor The Home Depot, Inc. HD registered an increase of 10.5% in the said period.

LOW's Past Six Months Performance

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LOW is currently trading at a discount to its historical and industry benchmarks. Lowe's forward 12-month price-to-earnings (P/E) multiple is 19.84x, above its median level of 18.74x in the past year and lower than the industry’s multiple of 22.96x. This implies that relative to its earnings potential, LOW stock might still be undervalued. For investors, this presents an attractive opportunity, which is further underscored by LOW’s current Value Score of B.

LOW Valuation Picture

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Final Words on LOW

Lowe’s is well-positioned for long-term growth with its strategic focus on expanding market share, enhancing customer experience and leveraging new technologies like AI. Total Home Strategy, store expansions and Pro customer initiatives are set to drive sustained growth. However, softness in the DIY segment pose near-term challenges. All said current investors are likely to benefit from holding, while new buyers could wait for a better time to enter the stock. Currently, Lowe’s carries a Zacks Rank #3 (Hold).

Stocks to Consider

Williams-Sonoma, Inc. WSM operates as an omni-channel specialty retailer of various products for home. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

WSM delivered a trailing four-quarter earnings surprise of 17.8%, on average. The Zacks Consensus Estimate for Williams-Sonoma’s current fiscal-year earnings indicates growth of 11.6% from the prior-year reported levels.

Tecnoglass Inc. TGLS manufactures, supplies, and installs architectural glass, windows, and associated aluminum and vinyl products for commercial and residential construction markets in Colombia, the United States, Panama, and internationally. It currently carries a Zacks Rank #2. TGLS delivered a trailing four-quarter earnings surprise of 5.7%, on average.

The Zacks Consensus Estimate for Tecnoglass’ current quarter sales and earnings indicates growth of 23.5% and 26.3%, respectively, from the prior-year reported levels.

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