Lowe's Companies, Inc.
Consumer Discretionary · Home Improvement Retail
Structural: US home-improvement duopoly with $HD; ~$1T addressable market split ~60/40 DIY vs Pro. LOW underindexes Pro (~25% of sales vs $HD ~50%), the explicit closing-the-gap thesis under CEO Ellison. Aging US housing stock (median ~40 yrs) + record home equity = secular repair-and-remodel tailwind once rates normalize.
- Pro mix shift: each 100bps of Pro share is high-margin incremental revenue; MVP loyalty program + Artisan acquisition + dedicated Pro sales force compounding
- Housing turnover trough: existing-home sales at multi-decade lows; any rate-cut cycle unlocks pent-up remodel demand
- Margin expansion: PPI (Perpetual Productivity Improvement) program targeting +100bps op margin through 2027
- Capital return: ~$15B+ buyback authorization, 2%+ dividend yield, sub-2x net leverage
- Defensible moat: scale + real estate footprint reproducible only by $HD
- Housing rates locked-in effect: 6M+ homeowners on sub-4% mortgages won't move, structurally suppressing turnover
- Pro share gap vs $HD may be structural (location density, supply chain depth), not just execution
- DIY softness: discretionary big-ticket (appliances, flooring) cyclically weak through 2025-26
- Amazon + Temu encroaching on smaller-ticket SKUs (paint, hardware, decor)
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