Why did GAAP EPS decline while sales grew about 10%?

Gross margin fell 70 basis points to 32.68%, and SG&A and depreciation and amortization both grew faster than sales. Depreciation and amortization rose to $566 million from $446 million, partly due to the $96 million of acquisition-related intangible amortization. Net interest expense also increased to $399 million from $337 million. Together these items held GAAP net earnings to $1.63 billion, down from $1.64 billion, and diluted EPS to $2.90 from $2.92.

What is the difference between GAAP and adjusted EPS, and why does it matter?

Adjusted diluted EPS of $3.03 excludes $96 million of pre-tax intangible amortization tied to the ADG and FBM acquisitions, equal to $0.17 pre-tax and $0.13 after tax per share. Management says this measure reflects underlying operating performance. Investors should note that the amortization is a real, recurring cost of these acquisitions, and the company also expects roughly $0.50 per share of after-tax amortization impact for the full year.

Is Lowe's full-year 2026 guidance still on track?

Yes. Management affirmed all full-year 2026 guidance, including sales of $92–94 billion, comps of flat to +2%, GAAP diluted EPS of $11.75–12.25, and adjusted diluted EPS of $12.25–12.75. Q1 comps of +0.6% are at the low end of the comp range, so the remaining quarters will need to improve for the comp guidance to hold. Management described the housing backdrop as challenging.

How has the balance sheet changed, and is leverage a concern?

Long-term debt, excluding current maturities, rose to $36.8 billion from $30.5 billion, and short-term borrowings of $380 million appeared alongside $378 million of commercial paper issuance. Cash fell to $786 million from $3.1 billion. Shareholders' deficit stood at $9.3 billion, which is typical for Lowe's given its history of share repurchases. Investors should watch debt service costs, since net interest expense rose 18% year over year, and the company's ability to delever as acquisition integration progresses.

What does this filing mean for the stock, and what should investors watch next?

The filing shows top-line growth and an affirmed outlook, but margin compression and higher interest and amortization costs weighed on GAAP earnings. Investors will likely focus on gross margin recovery, whether comps accelerate in the rest of 2026, and whether the acquired businesses (FBM and ADG) meet expectations. This summary is an analysis of the filing and not investment advice.

LOW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 20, 2026. Cited figures are marked; the original filing is the authoritative source.

Lowe's (LOW) reported first-quarter fiscal 2026 results for the period ended May 1, 2026.

Net sales rose about 10% to $23.1 billion^a from $20.9 billion, and comparable sales grew 0.6%, the company's fourth consecutive quarter of positive comps. GAAP diluted EPS was $2.90, down from $2.92 a year earlier, as higher amortization from the Foundation Building Materials (FBM) and Artisan Design Group (ADG) acquisitions and lower gross margin offset the top-line growth. Excluding $96 million in pre-tax acquisition-related intangible amortization ($0.13 per share after tax), adjusted diluted EPS rose 3.8% to $3.03.

Margin pressure is the central issue in the quarter. Gross margin fell 70 basis points to 32.68%, GAAP operating margin fell 85 basis points to 11.07%, and adjusted operating margin of 11.49% was down 43 basis points. Net interest expense rose to $399 million^b from $337 million, reflecting higher debt after the acquisitions.

Balance sheet changes are also notable: goodwill increased to $3.9 billion^c from $0.3 billion, intangible assets to $5.8 billion from $0.3 billion, and long-term debt to $36.8 billion from $30.5 billion, while cash fell to $786 million. Management affirmed its full-year 2026 outlook, including sales of $92.0 to $94.0 billion, comparable sales of flat to up 2%, GAAP diluted EPS of $11.75 to $12.25, and adjusted diluted EPS of $12.25 to $12.75.

The company paid $674 million^d in dividends during the quarter. Investors will likely focus on whether gross margin pressure and higher interest and amortization costs can be managed while comps remain weak in a challenging housing market.

02—Key points

Key Highlights

Net sales increased about 10% to $23.1 billion from $20.9 billion, and comparable sales rose 0.6%, the fourth straight quarter of positive comps.
GAAP diluted EPS was $2.90 versus $2.92 a year ago; adjusted diluted EPS, which excludes $96 million of acquisition-related amortization, rose 3.8% to $3.03.
Gross margin declined 70 basis points to 32.68%, and GAAP operating margin fell 85 basis points to 11.07%, indicating margin pressure despite sales growth.
Online sales grew 15.5%, with reported strength in Pro, appliances, and home services; positive comps came in 9 of 13 product categories and 11 of 15 regions.
Acquisitions of FBM and ADG drove goodwill to $3.9 billion and intangibles to $5.8 billion, and long-term debt rose to $36.8 billion from $30.5 billion, increasing net interest expense to $399 million.
Full-year 2026 guidance was affirmed, with sales of $92–94 billion, comps of flat to +2%, GAAP diluted EPS of $11.75–12.25, and adjusted diluted EPS of $12.25–12.75.
The company returned $674 million to shareholders via dividends and repurchased $363 million of stock during the quarter, while cash fell to $786 million from $3.1 billion a year earlier.

03—Questions

Frequently Asked Questions

Why did GAAP EPS decline while sales grew about 10%?
Gross margin fell 70 basis points to 32.68%, and SG&A and depreciation and amortization both grew faster than sales. Depreciation and amortization rose to $566 million from $446 million, partly due to the $96 million of acquisition-related intangible amortization. Net interest expense also increased to $399 million from $337 million. Together these items held GAAP net earnings to $1.63 billion, down from $1.64 billion, and diluted EPS to $2.90 from $2.92.
What is the difference between GAAP and adjusted EPS, and why does it matter?
Adjusted diluted EPS of $3.03 excludes $96 million of pre-tax intangible amortization tied to the ADG and FBM acquisitions, equal to $0.17 pre-tax and $0.13 after tax per share. Management says this measure reflects underlying operating performance. Investors should note that the amortization is a real, recurring cost of these acquisitions, and the company also expects roughly $0.50 per share of after-tax amortization impact for the full year.
Is Lowe's full-year 2026 guidance still on track?
Yes. Management affirmed all full-year 2026 guidance, including sales of $92–94 billion, comps of flat to +2%, GAAP diluted EPS of $11.75–12.25, and adjusted diluted EPS of $12.25–12.75. Q1 comps of +0.6% are at the low end of the comp range, so the remaining quarters will need to improve for the comp guidance to hold. Management described the housing backdrop as challenging.
How has the balance sheet changed, and is leverage a concern?
Long-term debt, excluding current maturities, rose to $36.8 billion from $30.5 billion, and short-term borrowings of $380 million appeared alongside $378 million of commercial paper issuance. Cash fell to $786 million from $3.1 billion. Shareholders' deficit stood at $9.3 billion, which is typical for Lowe's given its history of share repurchases. Investors should watch debt service costs, since net interest expense rose 18% year over year, and the company's ability to delever as acquisition integration progresses.
What does this filing mean for the stock, and what should investors watch next?
The filing shows top-line growth and an affirmed outlook, but margin compression and higher interest and amortization costs weighed on GAAP earnings. Investors will likely focus on gross margin recovery, whether comps accelerate in the rest of 2026, and whether the acquired businesses (FBM and ADG) meet expectations. This summary is an analysis of the filing and not investment advice.

04—Continue

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