Lowe’s (NYSE: LOW) is scheduled to release its fiscal first-quarter earnings on Wednesday, May 21, 2025, with analysts projecting earnings of $2.89 per share on $21.03 billion in revenue. This would represent a 6% year-over-year decline in earnings and a 2% fall in sales compared to the prior year’s figures of $3.06 per share and $21.36 billion in revenue. Historically, LOW stock has increased 55% of the time following earnings announcements with a median one-day rise of 1.7% and a maximum observed increase of 10%.
Lowe’s faces exposure to economic headwinds due to the structure of its business model. The company sources a substantial portion of its products globally, with key supply relationships in China, Canada, and Mexico. This global sourcing strategy, coupled with its primary customer base concentrated in North America, leaves Lowe’s vulnerable to trade disruptions and tariffs. Product categories particularly at risk include lumber, steel, aluminum, plumbing fixtures, and a range of tools and hardware. Additionally, demand from do-it-yourself (DIY) customers, who represent approximately 70% of the company’s sales, has softened, as many have become more hesitant to invest in home remodels 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 past twelve months. Also see, Buy or Sell Lowe’s?
For event-driven traders, historical patterns may offer an edge, whether by positioning ahead of earnings or reacting to post-release moves. That said, if you seek upside with lower volatility than from individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception. See earnings reaction history of all stocks.
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Lowe’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 11 positive and 9 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 55% of the time.
- However, this percentage decreases to 50% if we consider 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 data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
LOW Correlation Between 1D, 5D and 21D Historical Returns
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Lowe’s Companies stock compared with the stock performance of peers that reported earnings just before Lowe’s Companies. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
