AI Takeaway
Lowe's delivered strong Q2 FY2026 revenue growth of 10.3% to $23.1B, but net income slipped 0.8% to $1.6B as higher SG&A costs and a lower gross margin compressed profitability despite solid operating cash flow of $3.4B.
Revenue
$23.08B
++10.26% YoY
EPS (Basic)
$2.90
-1.02% YoY
Gross Margin
32.7%
-0.69% YoY
Operating Income
$2.55B
++2.41% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue rose 10.3% year-over-year to $23.1B in Q2 FY2026 (vs. $20.9B in Q2 FY2025), reflecting broad-based demand across Lowe's home improvement categories. This represents a meaningful acceleration in the company's top-line performance.
Source: Source: 10-Q Income Statement
Gross margin declined approximately 70 basis points to 32.7% (from 33.4% in the prior year period), as cost of revenue grew 11.4% — faster than revenue growth of 10.3% — indicating rising input or merchandise costs that outpaced pricing power.
Source: Source: 10-Q Income Statement
SG&A expenses increased 9.3% year-over-year to $4.4B, nearly in line with revenue growth, limiting operating leverage. Operating margin contracted to 11.1% from 11.9%, a decline of roughly 85 basis points.
Source: Source: 10-Q Income Statement
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Upgrade to unlockLowe's carries negative stockholders' equity of -$9.3B, resulting in a debt-to-equity ratio that is not meaningfully interpretable in traditional terms (-6.93x). Total liabilities of $64.2B significantly exceed total assets of $54.9B, indicating the company is technically insolvent on a book-value basis, a structure sustained primarily through strong and consistent operating cash flows.
Source: Source: 10-Q Balance Sheet
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Upgrade to unlock| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $23.08B | $20.93B | +10.26% |
Cost of Revenue | $15.54B | $13.94B | +11.41% |
Gross Profit | $7.54B | $6.99B | +7.97% |
Operating Income | $2.55B | $2.49B | +2.41% |
Net Income | $1.63B | $1.64B | -0.79% |
EPS (Basic) | $2.90 | $2.93 | -1.02% |
EPS (Diluted) | $2.90 | $2.92 | -0.68% |
SG&A Expense | $4.42B | $4.05B | +9.32% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $54.94B | $45.37B | +21.09% |
Current Assets | $22.16B | $22.68B | -2.26% |
Total Liabilities | $64.21B | $58.63B | +9.53% |
Current Liabilities | $20.27B | $22.39B | -9.44% |
Stockholders' Equity | $-9.27B | $-13.25B | +30.06% |
Cash & Equivalents | $786M | $3.05B | -74.26% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $3.35B | $3.38B | -0.86% |
Investing Cash Flow | $-501M | $-533M | +6.00% |
Financing Cash Flow | $-3.04B | $-1.55B | -96.07% |
Share Buybacks | $363M | $112M | +224.11% |
D&A | $644M | $507M | +27.02% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 32.7% | 33.4% | -0.69% |
Operating Margin | 11.1% | 11.9% | -0.85% |
Net Margin | 7.1% | — | — |
ROE | -17.6% | — | — |
ROA | 3.0% | — | — |
Current Ratio | $1.093 | — | — |
Debt to Equity | $-6.927 | — | — |
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Lowe's reported Q2 FY2026 revenue of $23.1B, up 10.3% year-over-year, but net income dipped slightly to $1.63B (-0.8%) as cost pressures weighed on margins. Diluted EPS came in at $2.90, essentially flat versus $2.92 in the prior year period.
The headline story is strong revenue growth of 10.3% to $23.1B, offset by gross margin compression (down ~70 bps to 32.7%) and rising SG&A costs (+9.3%), which together limited net income growth. Operating cash flow remained healthy at $3.35B, and the company accelerated share buybacks by 224% to $363M.
Lowe's net income fell 0.8% to $1.63B primarily because cost of revenue grew faster than sales (11.4% vs. 10.3%), compressing gross margin, while SG&A expenses also rose 9.3% to $4.4B. These dual cost pressures more than offset the benefit of the 10.3% revenue increase.
Key financial risks include Lowe's negative stockholders' equity of -$9.3B and total liabilities of $64.2B exceeding total assets of $54.9B, which reflects the company's highly leveraged capital structure. Additionally, cash and equivalents dropped sharply by 74.3% to just $786M, narrowing the company's short-term liquidity cushion.
Lowe's operational health is solid, with $23.1B in revenue and $3.35B in operating cash flow, but its balance sheet carries significant risk with negative book equity of -$9.3B and total liabilities of $64.2B. The current ratio of 1.09x is marginally above 1.0x, and the company continues to generate sufficient cash to service its debt and return capital to shareholders.