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Home Depot vs. Lowe's: Which Home Improvement Stock Has Better Upside?
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Key Takeaways
Home Depot leverages Pro growth, tech tools and supply-chain diversification to defend market share.
Lowe's drives Pro gains, online growth and market expansion with acquisitions and tech innovations.
HD outperformed LOW in the past year, aided by scale advantages and strong digital integration.
The Home Depot, Inc. (HD - Free Report) and Lowe’s Companies, Inc. (LOW - Free Report) remain the two titans of the U.S. home improvement retail sector, yet they are charting distinct paths in a market shaped by high interest rates, subdued housing turnover and selective consumer spending. Home Depot is leveraging its scale, supply-chain strength and Pro customer relationships to defend market share, while Lowe’s is executing a multi-year transformation aimed at expanding its Pro penetration, accelerating digital growth and diversifying product offerings.
In a sector where seasonality, macro conditions and innovation all play critical roles, the question is- which of these stocks offers the more compelling upside?
The Case for HD
Home Depot presents a strong long-term investment option for those seeking stability in the home improvement sector. Despite macroeconomic uncertainty, the company continues to demonstrate resilience through strategic execution and its ability to serve both DIY customers and professional contractors.
A key growth driver is its expanding Pro segment. The acquisition of SRS Distribution adds complementary verticals such as roofing, landscaping and pool supply while bolstering Home Depot’s trade credit program, a crucial asset for attracting and retaining large-scale Pro clients. Management sees SRS as a catalyst for capturing a greater share in the fragmented Pro market.
Home Depot’s investment in technology is delivering strong results. Its interconnected retail model, which blends digital and in-store experiences, has improved delivery speed and customer engagement. AI-powered tools like Magic Apron, combined with ongoing employee training, are helping transform stores into intelligent service hubs.
On the supply-chain front, the company’s diversification strategy reduces the reliance on any single country, with more than half of purchases sourced domestically. This helps mitigate geopolitical and tariff risks. Over the long term, Home Depot is well-positioned to benefit from structural tailwinds such as an aging U.S. housing stock, high home equity levels and pent-up remodeling demand that can be unlocked once interest rates normalize.
However, there are challenges to watch. Rising costs are putting pressure on margins, and demand for big-ticket remodels, particularly in kitchens and bathrooms, remains soft due to high interest rates. Inventory levels have also increased, which can create efficiency concerns if demand slows further.
The Case for LOW
Lowe’s continues to build on its position as a leading home improvement retailer, with particular strength in its Pro customer segment. Pro sales rose in the mid-single digits in the first quarter of fiscal 2025, supported by the nationwide relaunch of the MyLowe’s Pro Rewards program and targeted assortment improvements aimed at contractors and tradespeople.
The acquisition of Artisan Design Group is set to expand Lowe’s presence in the professional market, giving it access to a fragmented $50 billion opportunity and positioning it to benefit from an estimated 18 million new homes needed in the U.S. by 2033.
Lowe’s is advancing multiple growth initiatives, including rural market expansion and the planned opening of five to 10 new stores in 2025. Under its Total Home strategy, the company is focusing on areas such as expanding Pro sales, accelerating online growth and enhancing customer experience with investments in mobile smart devices for associates, same-day delivery and omni-selling capabilities. These efforts are expected to help lift comparable sales by 1.5% in the second quarter.
Digital capabilities are other growth engines. Lowe’s delivered a 6% year-over-year increase in online sales in the first quarter, driven by both higher traffic and improved conversion. The launch of the first home improvement product marketplace in the United States, powered by Mirakl, is expanding assortment without adding inventory or fulfillment costs.
Strategic technology partnerships are introducing AI-driven search, personalized recommendations and VR-powered design visualization, all aimed at enhancing the customer journey. Operational efficiency initiatives are also paying off. Perpetual productivity improvement programs and supply-chain investments helped lift the gross margin by 19 basis points year over year.
However, softness in big-ticket DIY discretionary categories remains challenging. Comparable sales fell 1.7% in the first quarter, with transaction volumes down 3.8%, as elevated interest rates, affordability concerns and macroeconomic uncertainty led customers to delay major projects in kitchens, baths, flooring and decor. Management does not anticipate a near-term rebound in this segment, which remains an important contributor to total revenue. Around 20% of Lowe’s purchase volume still comes from China, creating tariff exposure that can pressure margins in the second half of fiscal 2025.
HD vs. LOW: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Home Depot’s fiscal 2025 sales and earnings per share (EPS) implies year-over-year growth of 3.1% and a decline of 1.4%, respectively. The consensus estimate for EPS for the current fiscal year has decreased by one cent in the past seven days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lowe’s fiscal 2025 sales and EPS suggests year-over-year growth of 0.8% and 2.4%, respectively. The consensus estimate for EPS for the current fiscal year has decreased by one cent in the past seven days.
Image Source: Zacks Investment Research
HD vs. LOW: A Look at Stock Performances
Home Depot’s shares have gained 12.2% over the past year, while Lowe’s stock has risen 4.4%. HD’s outperformance reflects scale advantages, Pro segment growth and strong tech integration, while LOW’s more modest gain stems from ongoing transformation efforts tempered by soft DIY sales.
Image Source: Zacks Investment Research
HD vs. LOW: A Dive Into Stock Valuation
Home Depot is trading at a forward price-to-sales (P/S) multiple of 2.29, above its median of 2.15 in the last three years. Lowe’s forward 12-month P/S multiple sits at 1.57, above its median of 1.47 in the last three years. Here, Home Depot is pricier, with the higher forward P/S multiple.
Image Source: Zacks Investment Research
HD vs. LOW: Which is the Smarter Bet?
Between Home Depot and Lowe’s, the competitive edge at present leans toward Home Depot, given its scale advantages, deep Pro relationships and recent strategic acquisitions that expand its market reach and capabilities. While Lowe’s is making commendable strides through digital innovation, targeted market expansion and a more agile transformation plan, its heavier exposure to macro-sensitive DIY categories and tariff risks may limit near-term momentum. For investors seeking a steadier path with structural tailwinds, Home Depot appears the stronger bet now.
HD & LOW both currently carry a Zacks Rank #3 (Hold).
Image: Bigstock
Home Depot vs. Lowe's: Which Home Improvement Stock Has Better Upside?
Key Takeaways
The Home Depot, Inc. (HD - Free Report) and Lowe’s Companies, Inc. (LOW - Free Report) remain the two titans of the U.S. home improvement retail sector, yet they are charting distinct paths in a market shaped by high interest rates, subdued housing turnover and selective consumer spending. Home Depot is leveraging its scale, supply-chain strength and Pro customer relationships to defend market share, while Lowe’s is executing a multi-year transformation aimed at expanding its Pro penetration, accelerating digital growth and diversifying product offerings.
In a sector where seasonality, macro conditions and innovation all play critical roles, the question is- which of these stocks offers the more compelling upside?
The Case for HD
Home Depot presents a strong long-term investment option for those seeking stability in the home improvement sector. Despite macroeconomic uncertainty, the company continues to demonstrate resilience through strategic execution and its ability to serve both DIY customers and professional contractors.
A key growth driver is its expanding Pro segment. The acquisition of SRS Distribution adds complementary verticals such as roofing, landscaping and pool supply while bolstering Home Depot’s trade credit program, a crucial asset for attracting and retaining large-scale Pro clients. Management sees SRS as a catalyst for capturing a greater share in the fragmented Pro market.
Home Depot’s investment in technology is delivering strong results. Its interconnected retail model, which blends digital and in-store experiences, has improved delivery speed and customer engagement. AI-powered tools like Magic Apron, combined with ongoing employee training, are helping transform stores into intelligent service hubs.
On the supply-chain front, the company’s diversification strategy reduces the reliance on any single country, with more than half of purchases sourced domestically. This helps mitigate geopolitical and tariff risks. Over the long term, Home Depot is well-positioned to benefit from structural tailwinds such as an aging U.S. housing stock, high home equity levels and pent-up remodeling demand that can be unlocked once interest rates normalize.
However, there are challenges to watch. Rising costs are putting pressure on margins, and demand for big-ticket remodels, particularly in kitchens and bathrooms, remains soft due to high interest rates. Inventory levels have also increased, which can create efficiency concerns if demand slows further.
The Case for LOW
Lowe’s continues to build on its position as a leading home improvement retailer, with particular strength in its Pro customer segment. Pro sales rose in the mid-single digits in the first quarter of fiscal 2025, supported by the nationwide relaunch of the MyLowe’s Pro Rewards program and targeted assortment improvements aimed at contractors and tradespeople.
The acquisition of Artisan Design Group is set to expand Lowe’s presence in the professional market, giving it access to a fragmented $50 billion opportunity and positioning it to benefit from an estimated 18 million new homes needed in the U.S. by 2033.
Lowe’s is advancing multiple growth initiatives, including rural market expansion and the planned opening of five to 10 new stores in 2025. Under its Total Home strategy, the company is focusing on areas such as expanding Pro sales, accelerating online growth and enhancing customer experience with investments in mobile smart devices for associates, same-day delivery and omni-selling capabilities. These efforts are expected to help lift comparable sales by 1.5% in the second quarter.
Digital capabilities are other growth engines. Lowe’s delivered a 6% year-over-year increase in online sales in the first quarter, driven by both higher traffic and improved conversion. The launch of the first home improvement product marketplace in the United States, powered by Mirakl, is expanding assortment without adding inventory or fulfillment costs.
Strategic technology partnerships are introducing AI-driven search, personalized recommendations and VR-powered design visualization, all aimed at enhancing the customer journey. Operational efficiency initiatives are also paying off. Perpetual productivity improvement programs and supply-chain investments helped lift the gross margin by 19 basis points year over year.
However, softness in big-ticket DIY discretionary categories remains challenging. Comparable sales fell 1.7% in the first quarter, with transaction volumes down 3.8%, as elevated interest rates, affordability concerns and macroeconomic uncertainty led customers to delay major projects in kitchens, baths, flooring and decor. Management does not anticipate a near-term rebound in this segment, which remains an important contributor to total revenue. Around 20% of Lowe’s purchase volume still comes from China, creating tariff exposure that can pressure margins in the second half of fiscal 2025.
HD vs. LOW: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Home Depot’s fiscal 2025 sales and earnings per share (EPS) implies year-over-year growth of 3.1% and a decline of 1.4%, respectively. The consensus estimate for EPS for the current fiscal year has decreased by one cent in the past seven days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Lowe’s fiscal 2025 sales and EPS suggests year-over-year growth of 0.8% and 2.4%, respectively. The consensus estimate for EPS for the current fiscal year has decreased by one cent in the past seven days.
Image Source: Zacks Investment Research
HD vs. LOW: A Look at Stock Performances
Home Depot’s shares have gained 12.2% over the past year, while Lowe’s stock has risen 4.4%. HD’s outperformance reflects scale advantages, Pro segment growth and strong tech integration, while LOW’s more modest gain stems from ongoing transformation efforts tempered by soft DIY sales.
Image Source: Zacks Investment Research
HD vs. LOW: A Dive Into Stock Valuation
Home Depot is trading at a forward price-to-sales (P/S) multiple of 2.29, above its median of 2.15 in the last three years. Lowe’s forward 12-month P/S multiple sits at 1.57, above its median of 1.47 in the last three years. Here, Home Depot is pricier, with the higher forward P/S multiple.
Image Source: Zacks Investment Research
HD vs. LOW: Which is the Smarter Bet?
Between Home Depot and Lowe’s, the competitive edge at present leans toward Home Depot, given its scale advantages, deep Pro relationships and recent strategic acquisitions that expand its market reach and capabilities. While Lowe’s is making commendable strides through digital innovation, targeted market expansion and a more agile transformation plan, its heavier exposure to macro-sensitive DIY categories and tariff risks may limit near-term momentum. For investors seeking a steadier path with structural tailwinds, Home Depot appears the stronger bet now.
HD & LOW both currently carry a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.