Home Depot Edges Out Lowe's in Pro Business

Home Depot (HD) and Lowe's (LOW), two major home improvement retailers, are adapting to the current housing market in different ways. Home Depot is focusing on its growing Pro business, which has seen positive comparable sales in the second quarter and outperformed DIY customers.

The company has been investing heavily in job-lot quantities, delivery, sales teams, and specialized services to make life easier for contractors. With the acquisition of SRS Distribution, Home Depot can now combine its own assortment with SRS's distribution network and specialty products, giving Pro customers access to a broader catalog.

Lowe's, on the other hand, is trying to close the gap by strengthening both its contractor and DIY customer bases. It has been investing in digital tools that allow Pros to plan, quote, and manage their businesses through the Lowe's platform, as well as building out My Lowe's Rewards, which has grown to over 30 million members.

While both companies face challenges due to high borrowing costs and low housing turnover, Home Depot's larger Pro business, broader product offering, and SRS integration give it a stronger competitive position. Lowe's, however, has a credible path to closing the gap with its focus on loyalty, digital tools, and home services.

Valuation is also a factor, with Home Depot trading at around 19x forward earnings compared to Lowe's 15x. Analysts attribute this premium valuation to Home Depot's stronger moat and more established growth opportunity.