Lowe’s Companies (NYSE: LOW) and Home Depot, Inc. (The) (NYSE:HD) are both large-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.
Dividends
Lowe’s Companies pays an annual dividend of $1.64 per share and has a dividend yield of 2.2%. Home Depot, Inc. (The) pays an annual dividend of $3.56 per share and has a dividend yield of 2.4%. Lowe’s Companies pays out 51.6% of its earnings in the form of a dividend. Home Depot, Inc. (The) pays out 51.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lowe’s Companies has raised its dividend for 54 consecutive years and Home Depot, Inc. (The) has raised its dividend for 4 consecutive years. Home Depot, Inc. (The) is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares Lowe’s Companies and Home Depot, Inc. (The)’s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Lowe’s Companies | $66.64 billion | 0.94 | $7.51 billion | $3.18 | 23.31 |
| Home Depot, Inc. (The) | $97.36 billion | 1.84 | $16.07 billion | $6.96 | 21.50 |
Home Depot, Inc. (The) has higher revenue and earnings than Lowe’s Companies. Home Depot, Inc. (The) is trading at a lower price-to-earnings ratio than Lowe’s Companies, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Lowe’s Companies has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Home Depot, Inc. (The) has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.
Profitability
This table compares Lowe’s Companies and Home Depot, Inc. (The)’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Lowe’s Companies | 4.22% | 56.78% | 10.14% |
| Home Depot, Inc. (The) | 8.63% | 192.30% | 18.83% |
Analyst Recommendations
This is a breakdown of current ratings and price targets for Lowe’s Companies and Home Depot, Inc. (The), as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Lowe’s Companies | 1 | 9 | 14 | 0 | 2.54 |
| Home Depot, Inc. (The) | 1 | 6 | 18 | 0 | 2.68 |
Lowe’s Companies presently has a consensus target price of $86.03, suggesting a potential upside of 16.07%. Home Depot, Inc. (The) has a consensus target price of $168.09, suggesting a potential upside of 12.31%. Given Lowe’s Companies’ higher probable upside, equities analysts clearly believe Lowe’s Companies is more favorable than Home Depot, Inc. (The).
Institutional & Insider Ownership
74.7% of Lowe’s Companies shares are held by institutional investors. Comparatively, 71.3% of Home Depot, Inc. (The) shares are held by institutional investors. 0.1% of Lowe’s Companies 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 hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Summary
Home Depot, Inc. (The) beats Lowe’s Companies on 12 of the 16 factors compared between the two stocks.
Lowe’s Companies Company Profile
Lowe’s Companies, Inc. (Lowe’s) is a home improvement retailer. The Company operates approximately 1,860 home improvement and hardware stores, representing approximately 200 million square feet of retail selling space. The Company operates approximately 1,800 stores located across over 50 states in the United States, including approximately 80 Orchard Supply Hardware (Orchard) stores in California and Oregon, as well as approximately 40 stores in Canada and over 10 stores in Mexico. The Company operates through the home improvement retail operations segment. The Company offers a range of products for maintenance, repair, remodeling and decorating. The Company offers home improvement products in categories, including Lumber and Building Materials; Tools and Hardware; Appliances; Fashion Fixtures; Rough Plumbing and Electrical; Lawn and Garden; Seasonal Living; Paint; Flooring; Millwork; Kitchens; Outdoor Power Equipment, and Home Fashions.
Home Depot, Inc. (The) Company Profile
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.
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