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Following in the footsteps of rival Home Depot (HD), which posted better-than-expected Q4 results yesterday morning, Lowe's (LOW) delivered a solid earnings report of its own, beating Q4 EPS and revenue estimates. Buoyed by a strong holiday season and continued momentum in the Pro business, comparable sales swung back into positive territory after two years of declines, coming in at +0.2%. Also similar to HD, the company issued soft FY26 guidance, missing top and bottom-line expectations, but there's a sense that both HD and LOW are taking a conservative approach with their outlooks.

• For the second consecutive quarter, the Pro business achieved high-single-digit comp growth, easily outperforming the consumer DIY business. The company is seeing broad-based growth across its Pro geographies and its greater assortment of products and inventory depth is bolstering the business. In terms of specific categories, roofing, siding, and decking showed particular strength, while larger-scale projects like kitchen and bath remodels remained soft due to the high-interest rate environment.
• Echoing a similar message as HD's executives, LOW stated that the home improvement market remains challenging and that its difficult to predict when lower rates will materialize and provide a lift to the market. However, LOW is optimistic that the record levels of home equity will eventually push some homeowners to tap into that equity, unleashing some pent-up demand for larger projects. Furthermore, other key dynamics, such as rising personal income and the oldest existing housing supply in the country's history, will continue to work in LOW's favor.
• Consumers may still be shying away from large projects that typically require financing, but they are ramping up spending on big-ticket items like appliances, grills, and patio furniture. As such, comparable average ticket increased by 1.5%, offsetting a 1.3% decline in transactions.
• While demand gradually recovers, LOW has also kept a tight lid on costs as it executes its perpetual productivity initiative. In Q4, SG&A expense by about 2% yr/yr to $3.8 bln as productivity improved through new streamlined processes, such as a new freight flow process that LOW has implemented.

Much like HD, LOW is benefitting from a slow-and-steady recovery in the home improvement market, but persistently high interest rates are still creating a roadblock to a more complete turnaround. However, pent-up demand for larger-scale projects and consumer acceptance of a higher-for-longer interest rate environment may eventually help to mitigate these headwinds.