Key Stats for Lowe’s Stock
- Current Price: $191.36
- Target Price (Mid): ~$290
- Street Target: ~$252
- Potential Total Return: ~52%
- Annualized IRR: ~10% / year
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What Happened?
Lowe’s Companies (LOW) CEO Marvin Ellison sketched a timeline for bringing buybacks back into play at the Goldman Sachs Global Consumer and Retail Conference on September 15. He said Lowe’s expects to reach its 2.75x leverage target “at the midpoint next year,” adding, “we’re hoping as we get back to our leverage ratio next year that we will revisit share repurchases and get back into that market as well.”
The next day, the Federal Reserve raised rates for the first time since 2023. By September 17, Freddie Mac’s 30-year mortgage rate had climbed to 6.95% from 6.76% a week earlier. With no new guidance or earnings from the company, Lowe’s set a new intraday 52-week low of $188.22 by September 21 and closed at $191.36 on September 23, down about 25% over the past year.
Lowe’s Is a Quarter Turn of Leverage From Its Buyback Checkpoint
When Lowe’s agreed to buy Foundation Building Materials (FBM) in August 2025, its acquisition presentation filed with the SEC said it would pause share repurchases while cutting lease-adjusted debt to EBITDAR to 2.75x by the end of the second quarter of 2027. CFO Brandon Sink said on the Q2 earnings call that the ratio was 3.0x at the end of July, down from 3.1x reported a quarter earlier. Lowe’s also generated $3.1 billion of free cash flow in the quarter and ended it with $3.2 billion in cash.
Ellison’s buyback line is a stated hope. His capital order puts growth first, “both organically and inorganically,” followed by paying down debt and the dividend, now $1.25 a quarter. Repurchases get revisited only once leverage is back on target, and on deals, he said Lowe’s will stay “opportunistic” and “focus on tuck-in acquisitions.”
Interest expense rose to $1,406 million in fiscal 2025 from $1,313 million a year earlier, and consensus expects around $1.6 billion in fiscal 2026. At the September 23 close and about 15x forward P/E, each buyback dollar would retire about 40% more stock than at the January 30 close of $267.06.
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Housing Pressure Hits the Earnings Side of the Leverage Math
The leverage ratio has two parts, and weaker earnings can slow it even as debt falls. Third-quarter guidance points to adjusted EPS of about $2.85, roughly 7% below last year’s $3.06, and Ellison flagged transportation costs “we’re going to see in the second half of the year.”
The August 19 second-quarter report set up that squeeze. Adjusted EPS of $4.40 beat estimates with the help of a $0.11 tariff-refund benefit, but sales missed TIKR’s consensus by 0.56%, and full-year guidance moved to the bottom of its range. Shares closed down 1.21% that day.
Sink said Artisan Design Group (ADG) is fully exposed to residential construction, and FBM is about 45%. Ellison said roughly 55% of FBM’s revenue is commercial, with data center build-outs among its largest segments, though he conceded FBM is “not immune to the pressure.”
Lowe’s is holding the line on price after rivals used tariff refunds to discount in the second quarter, which Ellison called probably the most promotional activity he had seen in 25 years. He said separate DIY and Pro loyalty programs let Lowe’s run member-only offers “without making it a broad promotional strategy.” On pricing, he added that “whatever we do today, we have to comp against that next year.”
Analysts have cut targets even as ratings improved. The mean fell from about $286 on May 1 to about $252 on September 23, while the mix moved to 19 Buys, 5 Outperforms, 10 Holds, 1 Underperform, and no Sells listed.
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TIKR Advanced Model Analysis
- Current Price: $191.36
- Target Price (Mid): ~$290
- Potential Total Return: ~52%
- Annualized IRR: ~10% / year
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Case and horizon: Mid case, realized January 31, 2031. It implies a potential total return of about 52%, or around 10% a year.
Assumptions (2026 to 2036 forecast window): Revenue growth around 4% a year, close to the 3.9% Lowe’s averaged over the past decade. Net margins are near 8%, and a P/E that keeps contracting rather than recovering.
Revenue drivers: Pro and online gains, including builder pilots pairing FBM, ADG, and Lowe’s products, plus a gradual return of DIY project spending.
Margin driver: Lowe’s Perpetual Productivity Improvement cost program.
Buyback dependence: Consensus fiscal 2030 estimates for normalized net income (around $8.5 billion) and EPS (around $16.80) imply about 507 million shares. That’s roughly 10% fewer than the current 561.05 million, so Street numbers already assume repurchases return.
Primary risk: Housing weakness, now compounded by the Fed’s September hike, drags EBITDAR, pushes the leverage target past mid-2027, and delays those repurchases.
Upside: The most bullish analyst’s 12-month target, $290, matches what the model expects by January 2031. On-time deleveraging and a stronger margin outlook could pull that path forward.
Downside: The lowest Street target, $191, sits at the September 23 close. A buyback delay would undercut the per-share growth the mid-case needs.
Conclusion
December 9 is the next test. At its Analyst and Investor Conference in New York, Lowe’s plans to lay out “our profit algorithm relative to top line growth,” plus delivery initiatives, Ellison said, “we’ve yet to talk about publicly.” A reaffirmed mid-2027 leverage goal despite the Fed’s hike, a framework for restarting buybacks, and margin expansion on low-single-digit sales growth would support the mid case. A later leverage date or a lower margin target would push capital returns further out.
The third-quarter report, tentatively set for November 18, gives the first read. Leverage below 3.0x would show the paydown is on pace.
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Should You Invest in Lowe’s?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
