The Home Depot, Inc. (HD Quick QuoteHD - Free Report) and Floor & Decor Holdings, Inc. (FND Quick QuoteFND - Free Report) are major players within the Retail - Home Furnishings industry. Home Depot boasts a market capitalization of around $409 billion and operates more than 2,300 stores. As the world’s largest home improvement retailer, it offers a broad range of building materials, tools, appliances and décor products, serving both professional contractors and DIY homeowners.

Floor & Decor, by contrast, has a market capitalization of roughly $8.8 billion and focuses exclusively on the hard-surface flooring market. With more than 250 warehouse-format stores nationwide, the company follows a low-cost, high-inventory model that provides customers with a wide variety of in-stock flooring products at competitive prices.

Amid shifting housing trends and evolving consumer spending patterns, investors are faced with a pivotal question: Which home improvement retailer is best positioned to capitalize on the changing landscape, especially as the Federal Reserve begins to ease interest rates?

The Case for Home Depot

Home Depot continues to present itself as a compelling investment opportunity, driven by its market-leading position and ability to effectively serve both DIY customers and professional contractors. Management’s decision to reaffirm its full-year outlook despite a mixed macro backdrop demonstrates confidence in both near-term demand trends and the company’s long-term growth trajectory. For fiscal 2025, Home Depot expects total sales growth of about 2.8% on a 52-week basis, comparable sales growth of roughly 1% and an adjusted operating margin of 13.4%. The company also plans to open around 13 new stores during the year, showing that capital is being deployed toward both expansion and operational improvements.

A key factor supporting the bullish case is the improving sales momentum. Second-quarter sales rose 4.9% year over year to $45.3 billion, with 1% growth in overall comparable sales and 1.4% in the United States. Monthly comps moved from a 0.3% decline in May to a 3.1% gain in July, signaling improving consumer engagement and setting a positive tone for the remainder of the fiscal year. Twelve of the sixteen merchandise categories posted positive comparable sales growth, with strength in building materials, appliances, garden supplies, plumbing and electrical. Big-ticket comp transactions above $1,000 also grew 2.6%, while the average ticket size rose 1.4%.

Home Depot’s digital transformation is another pillar of its growth strategy. Online comparable sales climbed about 12% in the quarter, driven by faster same-day and next-day delivery capabilities and enhanced digital tools such as AI-powered search and “buy-it-again” functionality. These initiatives are boosting customer satisfaction and engagement, with management noting that customers using these services have demonstrated a double-digit increase in spending and purchase frequency. This strong digital adoption is supporting Home Depot’s efforts to build a seamless omnichannel shopping experience and improve productivity across its network.

The professional, or Pro, customer segment continues to be a major growth driver. Several thousand Pro customers are now using Home Depot’s trade credit facilities, with spending levels rising by double digits after activation. The SRS acquisition, completed a year ago, is already exceeding expectations in both growth and synergy realization. Now, with GMS folded in, SRS expands to more than 1,200 locations supported by more than 3,500 associates and about 8,000 trucks, enabling tens of thousands of jobsite deliveries daily. These efforts are strengthening Home Depot’s leadership in specialty distribution and enabling capital-light growth through a wider network of distribution centers.

While Home Depot remains a strong operator, there are still reasons for caution. The company continues to face pressure from a softer environment for big-ticket renovations, particularly those requiring financing, as homeowners remain cautious amid economic uncertainty. This weakness in large discretionary projects, coupled with declining operating margins, rising expenses and elevated interest costs, limits near-term earnings potential despite ongoing efforts to expand capabilities in the Pro segment.  It anticipates a decline in earnings per share of about 3% compared with the prior year, or 2% on an adjusted basis.

The Case for Floor & Decor

Floor & Decor continues to emerge as a strong contender, supported by excellent operational performance and a clear growth path. The company’s second-quarter 2025 results show a 7.1% year-over-year increase in net sales, with earnings per share rising 11.5%. Comparable store sales grew 0.4%, marking the first same-store sales increase since late 2022 and indicating a potential demand recovery. A 60-basis-point gross margin expansion to 43.9%, driven by better supply-chain costs and disciplined pricing, highlights Floor & Decor’s strong operating leverage and margin management.

The ongoing store expansion provides a tailwind to both revenues and market share. Floor & Decor opened three new warehouse-format stores in the second quarter, bringing the total count to 257 locations, up 12% year over year. Management reaffirmed its plan to open 20 new warehouse stores in fiscal 2025 and at least another 20 in 2026, with the capacity to accelerate above that when housing conditions improve. This expanding footprint is complemented by a growing professional customer base, now accounting for about 50% of total sales. Targeted initiatives such as pro marketing campaigns and community engagement events are fueling market share gains.

The company is also benefiting from emerging high-margin verticals, particularly design services and commercial projects. Design-driven sales continue to grow at a rapid pace, with higher average ticket sizes and enhanced profitability. By leveraging design expertise and in-store collaboration tools, Floor & Decor differentiates itself from traditional big-box competitors, creating a value proposition that resonates with both professional and retail customers. Meanwhile, Spartan Surfaces, Floor & Decor’s commercial division, posted 7% sales growth in the quarter. Momentum in high-specification sectors like healthcare, education, hospitality, and senior living positions Spartan for durable growth with attractive margin potential. 

Management foresees fiscal 2025 revenues between $4.66 and $4.75 billion, implying 5-7% year-over-year growth, with average ticket comp expected to be up low to mid-single digits. The outlook reflects resilient consumer spending, strong labor markets, and Floor & Decor’s structural advantages, including a direct global sourcing network spanning over 240 vendors across 26 countries and rising U.S.-sourced product penetration, which now accounts for 27% of sales versus 20% in 2018. These factors, combined with disciplined cost management and a growing store base, position Floor & Decor to deliver consistent growth and margin resilience.

While Floor & Decor demonstrates multiple growth drivers and operational strengths, it is constrained by a weak housing market and strained homeowner spending. High mortgage rates and low existing home sales are limiting large renovation projects, pushing customers toward smaller, lower-ticket upgrades. Declining transaction volumes and soft weekend traffic highlight reduced engagement from the core DIY homeowner segment, making the company increasingly reliant on larger, higher-value purchases and on broader macroeconomic recovery, which could restrict growth. Management expects comparable store sales to be flat to down 2% for the year.

HD vs. FND: How Do Estimates Stack Up?

The Zacks Consensus Estimate for Home Depot’s current financial-year sales implies year-over-year growth of 2.9%, while the same for earnings per share suggests a decline of 1.4%. The consensus estimate for EPS for the current fiscal year has been stable at $15.03 over the past 30 days. 
 

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The Zacks Consensus Estimate for Floor & Decor’s current financial-year sales calls for year-over-year growth of 5.7%, while the same for earnings per share implies a decrease of 1.1%. The consensus estimate for EPS for the current fiscal year has been stable at $1.83 over the past 30 days. 
 

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HD vs. FND: A Look at Six-Month Stock Performance

Despite operating in the same industry, the stock trajectories of Home Depot and Floor & Decor have diverged significantly. Over the past six months, Home Depot shares have gained 13.9%, whereas Floor & Decor shares have slipped 1.2% compared with the overall industry growth of 12.5%.
 

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HD vs. FND: A Peek Into Stock Valuation

Home Depot is trading at a forward 12-month price-to-earnings (P/E) ratio of 25.86, above its one-year median of 25.07. Meanwhile, Floor & Decor’s forward P/E ratio stands at 39.17, below its median of 41.76.
 

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HD vs. FND: Which Stock Looks More Promising Now?

When compared with Floor & Decor, Home Depot offers a strong investment case. Its unmatched scale, diversified product offerings, and deep penetration in both DIY and professional markets provide resilience against economic fluctuations. Home Depot’s robust digital capabilities, expanding Pro customer base and steady store growth enable consistent revenue growth, even in a soft housing market. In contrast, Floor & Decor, although benefiting from store expansion and high-margin design services, remains highly exposed to housing weakness and discretionary spending pressures, limiting its near-term upside. Home Depot and Floor & Décor each carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.