Home Depot vs Lowe's Which Is More Attractive?

Home Depot and Lowe's are two of the largest home improvement retailers in the United States. Both companies have been in business for several decades and have a strong presence in the industry. When it comes to stocks, Home Depot has traditionally been the stronger performer with consistent growth and higher profitability. However, Lowe's has been making strides in recent years to close the gap and improve its financial performance. Investors looking to invest in the home improvement sector should carefully consider the strengths and weaknesses of both Home Depot and Lowe's stocks before making a decision.

Home Depot or Lowe's?

When comparing Home Depot and Lowe's, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Home Depot and Lowe's.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Home Depot has a dividend yield of 2.16%, while Lowe's has a dividend yield of 1.72%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Home Depot reports a 5-year dividend growth of 15.20% year and a payout ratio of 60.05%. On the other hand, Lowe's reports a 5-year dividend growth of 19.29% year and a payout ratio of 37.18%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Home Depot P/E ratio at 28.28 and Lowe's's P/E ratio at 21.71. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Home Depot P/B ratio is 71.42 while Lowe's's P/B ratio is -11.08.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Home Depot has seen a 5-year revenue growth of 0.61%, while Lowe's's is 0.69%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Home Depot's ROE at 447.13% and Lowe's's ROE at -48.23%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $414.22 for Home Depot and $262.07 for Lowe's. Over the past year, Home Depot's prices ranged from $323.77 to $439.37, with a yearly change of 35.70%. Lowe's's prices fluctuated between $209.55 and $287.01, with a yearly change of 36.96%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.