The end of the year brings joy to many as people celebrate the holidays. In between parties and family gatherings, it's also a good time for investors to review their holdings and potential investments.
Let's turn to home-improvement retailer Lowe's (LOW +0.60%) to see how the company performed in 2025, and what to look for in 2026.
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A look at 2025
Based on the stock's performance, Lowe's shareholders don't have much to celebrate in 2025. The share price lost 0.1% this year, through Dec. 15, well behind the S&P 500 index's 15.6% appreciation. When adding dividends, Lowe's stock returned 2.8%, trailing the index's 17.3% total return.
NYSE: LOW
Key Data Points
Lowe's had positive same-store sales (comps) over the last couple of quarters. However, fiscal third-quarter comps only increased 0.4%. The period ended on Oct. 31.
The comps increase was due to higher spending, with the average ticket contributing 3.4 percentage points. Traffic declined, accounting for a 3 percentage point drop in comps.
What to watch for in 2026
The company's sales results fluctuate with the economy. That's because people tend to buy homes and take on major projects when they're feeling good about their economic prospects. Certain issues in the overall economy have undoubtedly played a role in the company's recent sluggish comps.
You should pay particular attention to certain U.S. economic statistics. Notably, new home and existing home sales should top the list. That's because people tend to undertake remodeling projects when they buy a home. As a major home-improvement retailer, that bodes well for Lowe's.
It's also important to look at what's happening with interest rates. Longer-term Treasury yields affect mortgage rates, which in turn impact homebuying. But you should also watch to see if the Federal Reserve continues cutting short-term interest rates. These affect home equity loans, which some people use to finance major home renovations.
Employment, another important consideration when examining Lowe's prospects, has shown signs of weakness. Obviously, people who have lost, or fear losing, their jobs aren't likely to spend a lot of money at Lowe's for significant projects.
Consumer confidence affects the economy, too. If people feel good, they'll spend money, boosting economic growth.
While it's important to monitor the U.S. economy's overall health, you should also look at the company specifically. Lowe's, like Home Depot (HD +1.15%), has been making a major push into the professional contractor market. This includes acquiring Foundation Building Materials for $8.8 billion and Artisan Design Group for $1.3 billion, both completed this year.
It's worth listening to any comments management provides regarding Lowe's progress with professional contractors, particularly sales growth to this market.
