Lowe's And Home Depot Are Head To Head

Apr. 18, 2017 4:45 AM ETThe Home Depot, Inc. (HD), LOW13 Comments
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The Dividend Guy


  • Both companies evolve in a promising market for the future.
  • After analysis, both companies would fit in a dividend growth portfolio.
  • Both companies show nearly 20% upside potential.

Investment thesis

There is currently a unique combination of data showing home improvement and home renovation products will continue to grow in the upcoming years. The combination I'm looking at are new housing starts, consumer sentiment and existing home sales:

Source: Ycharts

After a terrible 2008-2009 period, the three metrics show a steady uptrend since 2010. This lead to strong years for both Home Depot (NYSE:HD) and Lowe's (NYSE:LOW). This analysis will show you there is little to no difference to hold one of the other. In fact, both companies look like good investing opportunities.

Business Overview

Home Depot is the world's largest home improvement retailers by market cap. In fact, it is more than double the size of Lowe's ($176 billion v. $70.5 billion). Founded in 1978, HD is a success story with currently 2,200 stores across the U.S. The company is known for its obsession for client service and this is probably why they have able to grow so fast since their creation.

Source: HD website

In the past decade, HD has focused on creating seamless renovation services to invite more homeowners to renovate their houses. They have focused on a strong online presence using renovation pictures through social media platforms like Pinterest.

On the other side, Lowe's is much older as it was founded in 1946 and went public in 1961, before Home Depot was even founded. Their growth has been solid, but less impressive than Home Depot, as they currently have 1,840 stores in the U.S., 16% less its competitor.

Source: LOW presentation

Lowe's is also focusing on a seamless experience through the development of the "OMNI-CHANNEL PLATFORM". While both companies target the retail business in a similar way, I sense more interest from Lowe's to target the Pro customer (contractors) as highlighted in their presentation:

This article was written by

The Dividend Guy profile picture
My name is Mike and I’m the author of The Dividend Guy Blog & The Dividend Monk along with the owner and portfolio manager here at Dividend Stocks Rock (DSR). I earned my bachelor degree in finance-marketing, own a CFP title along with an MBA in financial services. Besides being a passionate investor, I’m also happily married with three beautiful children. I started my online venture to educate people about investing and to be able to spend more time with my family. I started my career in the financial industry back in 2003. I earned several promotions along with a good pile of diplomas. I had lots of fun working with clients in private banking for half a decade, but thought I could do more with my life. In 2016, I decided to take a leap of faith and left everything behind to travel across North America and Central America with my family. We drove through nine countries and stayed three months in Costa Rica before returning home. This was an eye-opening adventure that led me in 2017 to quit my job in the financial industry and pursue my dream; helping others with their personal finance through my investing websites. You just found the reason why I quit my suit & tie job!

Disclosure: I am/we are long LOW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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