Home Depot Edges Out Lowe's in Near-Term Momentum

The recent earnings reports from Home Depot and Lowe's have provided valuable insights into their performance in the current market. Both companies operate in the home improvement industry, but they have faced different challenges due to the post-pandemic era. Housing turnover has been slow, affordability pressures are high, and spending on large remodeling projects is cautious.

Home Depot's sales increased by 4.8% to $41.8 billion, with adjusted EPS declining by 3.7%. However, comparable sales rose 0.6%, and the average ticket price grew 2.2%. Lowe's, on the other hand, saw a 10.3% increase in sales to $23.1 billion, thanks in part to acquisitions.

Revisions for Home Depot have been stable over recent months, with EPS and sales revisions expected to see roughly 5% growth and 0.6% higher earnings YoY. In contrast, Lowe's revisions have been more negative, with EPS and sales revisions down 2.1% and 0.6%, respectively.

The Zacks Rank #3 (Hold) for Home Depot indicates a more favorable near-term momentum compared to Lowe's Zacks Rank #4 (Sell). Home Depot also trades at a higher premium relative to Lowe's, with a forward 12-month multiple of 21.7X compared to Lowe's 16.9X.