Critical Review: Home Depot, Inc. (The) (HD) versus Lumber Liquidators Holdings (LL)

Lumber Liquidators Holdings (NYSE: LL) and Home Depot, Inc. (The) (NYSE:HD) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitabiliy, dividends and earnings.

Profitability

This table compares Lumber Liquidators Holdings and Home Depot, Inc. (The)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lumber Liquidators Holdings	-6.41%	-18.93%	-8.76%
Home Depot, Inc. (The)	8.53%	158.80%	18.49%

Risk and Volatility

Lumber Liquidators Holdings has a beta of 2.21, suggesting that its stock price is 121% more volatile than the S&P 500. Comparatively, Home Depot, Inc. (The) has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Lumber Liquidators Holdings and Home Depot, Inc. (The), as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lumber Liquidators Holdings	0	6	4	0	2.40
Home Depot, Inc. (The)	1	6	17	0	2.67

Lumber Liquidators Holdings presently has a consensus target price of $18.14, indicating a potential downside of 26.93%. Home Depot, Inc. (The) has a consensus target price of $164.03, indicating a potential upside of 11.56%. Given Home Depot, Inc. (The)’s stronger consensus rating and higher possible upside, analysts clearly believe Home Depot, Inc. (The) is more favorable than Lumber Liquidators Holdings.

Dividends

Home Depot, Inc. (The) pays an annual dividend of $3.56 per share and has a dividend yield of 2.4%. Lumber Liquidators Holdings does not pay a dividend. Home Depot, Inc. (The) pays out 53.3% of its earnings in the form of a dividend. Home Depot, Inc. (The) has raised its dividend for 4 consecutive years.

Earnings and Valuation

This table compares Lumber Liquidators Holdings and Home Depot, Inc. (The)’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Lumber Liquidators Holdings	$975.46 million	0.72	-$37.56 million	($2.26)	-10.99
Home Depot, Inc. (The)	$95.72 billion	1.84	$15.69 billion	$6.68	22.01

Home Depot, Inc. (The) has higher revenue and earnings than Lumber Liquidators Holdings. Lumber Liquidators Holdings is trading at a lower price-to-earnings ratio than Home Depot, Inc. (The), indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

74.7% of Lumber Liquidators Holdings shares are held by institutional investors. Comparatively, 71.6% of Home Depot, Inc. (The) shares are held by institutional investors. 4.0% of Lumber Liquidators Holdings shares are held by insiders. Comparatively, 0.3% of Home Depot, Inc. (The) shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Home Depot, Inc. (The) beats Lumber Liquidators Holdings on 12 of the 16 factors compared between the two stocks.

About Lumber Liquidators Holdings

Lumber Liquidators Holdings, Inc. is a multi-channel specialty retailer of hardwood flooring, and hardwood flooring enhancements and accessories. The Company offers hardwood species, engineered hardwood, laminate and resilient vinyl flooring direct to the consumer. Its product categories include Solid and Engineered Hardwood; Laminate; Bamboo, Cork, Vinyl Plank and Other, Moldings and Accessories, and Non-Merchandise Services. It features the renewable flooring products, bamboo and cork, and provides a selection of flooring enhancements and accessories, including moldings, noise-reducing underlay, adhesives and flooring tools. It operates in a holding company structure with Lumber Liquidators Holdings, Inc. serving as its parent company and certain direct and indirect subsidiaries, including Lumber Liquidators, Inc., Lumber Liquidators Services, LLC, Lumber Liquidators Production, LLC, and Lumber Liquidators Canada ULC, conducting its operations.

About Home Depot, Inc. (The)

The Home Depot, Inc. (The Home Depot) is a home improvement retailer. The Company sells an assortment of building materials, home improvement products, and lawn and garden products, and provides various services. The Home Depot stores serves three primary customer groups: do-it-yourself (DIY) customers, do-it-for-me (DIFM) customers and professional customers. Its DIY customers are home owners purchasing products and completing their own projects and installations. The Company assists these customers with specific product and installation questions both in its stores and through online resources and other media designed to provide product and project knowledge. Its DIFM customers are home owners purchasing materials themselves and hiring third parties to complete the project or installation. Professional Customers are primarily professional renovators/remodelers, general contractors, repairmen, installers, small business owners and tradesmen.