Lowe’s Stock Has Fallen 22% From Its Peak. Could the New Housing Bill Make 2026 the Turning Point?

Key Stats for Lowe’s Stock

• Current Price: $222.48
• Target Price (Mid): ~$327
• Street Target: ~$264
• Potential Total Return: ~47%
• Annualized IRR: ~9% / year
• Earnings Reaction: -1.65% (5/20/26)
• Max Drawdown: -28.10% (6/2/26)

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What Happened?

Lowe’s Companies (LOW) spent most of 2026 as a stock the market did not want to own, and then Washington handed the whole sector a reason to look again. Shares sit near $222, roughly 22% below the February all-time high of $286.02, with a 28.10% drawdown logged on June 2. The business kept posting positive comparable sales the whole way down. The market kept paying less for them anyway.

That gap between operating results and share price is the entire LOW debate. Bulls see a high-return retailer trading at a discount because the housing cycle is stuck, not because the company is broken. Bears see a stock whose valuation has leaned on a mortgage-rate recovery that keeps not arriving. The question neither side could answer was simple: what actually unfreezes this?

On June 23, Congress offered a partial answer, though Lowe’s is a secondary beneficiary rather than the headline one.

A Housing Bill Lifts the Sector, and Lowe’s Rides Along

Congress passed the 21st Century ROAD to Housing Act, the largest housing package in decades. The Senate cleared it 85-5 on June 22, and the House followed 358-32 the next day. The bill is primarily a supply and affordability measure. It eases homebuilding regulation, funds programs for lower-income renters and buyers, and restricts large investors from buying single-family homes. Housing experts told TIME the effects will take time and are weighted toward lower-income households, not the big-ticket remodel demand that drives home centers.

So the most direct beneficiaries were homebuilders and the broad construction ecosystem. Home improvement retailers rallied as part of that move. LOW rose about 3.2% on June 24, while category leader Home Depot rose more, and falling Treasury yields and softer crude that day added to the lift. There was a catch: President Trump abruptly postponed the signing ceremony, demanding separate voting legislation first. The veto-proof majorities suggest the structural support survives the friction.

For Lowe’s specifically, the relevant hook is narrow but real. The package includes home-repair funding for low- and moderate-income owners, which feeds renovation and maintenance demand over time. As a result, the bill does not fix Lowe’s demand, but it gives the long-running recovery thesis its first policy catalyst in two years.

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What Management Said When Nobody Was Pricing In Good News

At the Oppenheimer Consumer Growth & E-Commerce Conference on June 18, before the bill passed, CEO Marvin Ellison named the unlock investors should track. He said mortgage rates coming down is “obviously the big macro unlock that we’re looking for,” tying that move to core inflation and gas prices easing. That is the lever. The housing bill works on the supply side of the same equation.

What stood out was management’s insistence that the company is building for an inflection it cannot yet see. Ellison argued the opportunity ahead is “greater in front of us than I think that what’s been behind us,” citing the marketplace launch, AI tools, and the Pro build-out. CFO Brandon Sink reinforced the discipline underneath it, pointing to a roughly $1 billion productivity target for 2026, split between margin and overhead. That matters because it explains how Lowe’s defends earnings while the top line waits on housing.

The Pro story is the clearest evidence. Ellison noted Pro penetration has climbed from roughly 18% in 2018 to approaching 40% today, before counting the Foundation Building Materials (FBM) and Artisan Design Group (ADG) acquisitions. FBM (a distributor of drywall, steel framing, and insulation) and ADG (cabinets, countertops, and flooring) together open a $250 billion total addressable market in residential construction interiors, a space where Lowe’s previously had zero revenue.

The Valuation Tension Is Housing Timing, Not Business Quality

Here is where the discount gets interesting. Lowe’s online sales grew 15.5% last quarter, powered by Mylow, its AI shopping assistant, which roughly triples conversion for customers who use it. The company runs a free cash flow machine, posted a 29.7% LTM return on invested capital, and just raised its dividend 4% to $1.25 per quarter, extending its streak to a 53rd consecutive year. None of that reads like a business in trouble.

The pressure is real and specific. Gross margin compressed about 70 basis points year-over-year to 32.7% in Q1 as FBM integration diluted the mix, and management expects that dilution to anniversary in the back half of fiscal 2026. The bear case is timing: if mortgage rates stay elevated into 2027, comps stay flat, and the multiple stays compressed. The bull case is that the same FBM and ADG drag fades just as housing policy and rate relief arrive, turning today’s margin headwind into tomorrow’s tailwind.

On peers, the discount is not obvious on every metric. Lowe’s trades at 12.62x NTM EV/EBITDA, a premium to the specialty retail peer mean of 11.92x, and at 17.48x NTM P/E versus the peer mean of 16.35x. Against direct comparisons, though, it screens cheaper than off-price names like TJX (20.09x EV/EBITDA) and Ross (18.01x), and roughly in line with Williams-Sonoma (17.04x). The premium to the broad group reflects Lowe’s scale and returns. The discount to its own history reflects housing, not deterioration.

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TIKR Advanced Model Analysis

• Current Price: $222.48
• Target Price (Mid): ~$327
• Potential Total Return: ~47%
• Annualized IRR: ~9% / year

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The two revenue drivers are Pro ecosystem expansion (FBM and ADG consolidating roughly $8 billion of new construction sales into the base) and sustained above-market online growth. The mid case assumes a revenue CAGR of around 3%, well within what Lowe’s has shown. The margin driver is the roughly $1 billion annual productivity program holding net income margin near 8% as acquisition dilution fades. The primary risk is housing turnover staying frozen through 2027, which would keep comps flat and the multiple compressed.

The upside: rate relief and the housing bill combine to thaw big-ticket demand just as FBM margin drag reverses, lifting earnings and the multiple toward the mid case. 

The downside: mortgages stay high, the recovery slips again, and the stock drifts while collecting its dividend.

Conclusion

The single thing to watch is Lowe’s Q2 fiscal 2026 report, expected in late August. Management said on the Oppenheimer call it would update the tariff refund process and any housing-policy benefit then, which makes it the first read on whether the ROAD to Housing optimism shows up in real demand. “Good” looks like comparable sales holding flat to positive with a credible path toward the back-half margin recovery as FBM dilution anniversaries. “Bad” looks like comps slipping negative or guidance walking back the $12.25 to $12.75 adjusted EPS range. The bill gave the sector a catalyst. August tells you whether Lowe’s is ready to use it.

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Should You Invest in Lowe’s?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up Lowe’s, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track Lowe’s alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

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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!