Lowe’s (NYSE: LOW) is set to disclose its fiscal first-quarter earnings on Wednesday, May 21, 2025, with analysts anticipating earnings of $2.89 per share on revenue of $21.03 billion. This would indicate a 6% decrease in earnings year-over-year and a 2% decline in sales compared to the previous year’s results of $3.06 per share and $21.36 billion in revenue. Historically, LOW stock has risen 55% of the time after earnings announcements, with a median one-day gain of 1.7% and a maximum recorded increase of 10%.
Lowe’s is exposed to economic headwinds due to its business model. The company obtains a significant portion of its products from around the globe, with key supply chains in China, Canada, and Mexico. This global sourcing approach, along with its main customer base focused in North America, renders Lowe’s susceptible to trade disruptions and tariffs. Product categories that are especially at risk include lumber, steel, aluminum, plumbing fixtures, and various tools and hardware. Moreover, the demand from do-it-yourself (DIY) customers, who account for approximately 70% of the company’s sales, has weakened, as many have grown more reluctant to spend on home remodelings and upgrades. With a current market capitalization of $130 billion, the company reported $84 billion in revenue, $10 billion in operating profit, and $7 billion in net income over the last twelve months. Also check, Buy or Sell Lowe’s?
For event-driven traders, historical trends may provide an advantage, whether by positioning prior to earnings or reacting to movements after the release. That being said, if you are looking for upside with lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and produced returns exceeding 91% since its inception. See earnings reaction history of all stocks.
Lowe’s Historical Odds Of Positive Post-Earnings Returns
Here are some insights on one-day (1D) post-earnings returns:
- There are 20 earnings data points documented over the past five years, with 11 positive and 9 negative one-day (1D) returns recorded. In summary, positive 1D returns were noted approximately 55% of the time.
- However, this ratio drops to 50% if we analyze data for the last 3 years instead of 5.
- Median of the 11 positive returns = 1.7%, and median of the 9 negative returns = -3.7%
Additional information on the observed 5-Day (5D), and 21-Day (21D) returns post earnings is summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not applicable if the correlation is weak) is to understand the correlation between short-term and medium-term returns after earnings, identify a pair that has the strongest correlation, and execute the corresponding trade. For instance, if the 1D and 5D show the strongest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on a 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and the subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
At times, the performance of peers may impact the stock reaction post-earnings. In fact, the pricing-in might commence before the earnings announcement. Here is some historical data on the prior post-earnings performance of Lowe’s Companies stock in comparison with the stock performance of peers that reported earnings just before Lowe’s Companies. For a fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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