HD juggles capex, dividends and debt reduction while pausing buybacks amid the integration of SRS and the pending GMS deal.
Lowe's (LOW) is more earnings-efficient than Home Depot (HD), with improving margins and strong free cash flow conversion despite revenue growth declines. LOW's strategic acquisitions targeting the high-margin Pro segment position it for revenue recovery and future growth, making it more attractive than HD currently. HD maintains stronger top-line growth and a higher dividend yield, but faces margin compression and declining capital efficiency, limiting its upside potential.
HD posts steady EPS in Q2 but faces operating margin pressure as costs rise faster than sales.
Recently, Zacks.com users have been paying close attention to Home Depot (HD). This makes it worthwhile to examine what the stock has in store.
Question: Why put your money into Home Depot stock (NYSE: HD) at a price-to-earnings ratio of 28, when Lowe's stock (NYSE: LOW) is offered at a lower ratio of 22? In fact, you might, particularly when you take into account these straightforward facts:
Home Depot has had flat EPS growth since 2021. Share price has improved in the past 3 years, largely because of multiple expansion. Recent acquisitions have boosted revenue, but margin pressure has stalled EPS growth. The current valuation looks expensive, justified only if Home Depot can return to 10-12% EPS growth.
One analyst says a pullback in promotional deals raised prices, possibly due to “a desire to protect margins in a tariffed environment.”
Lowe's stock gains after it beat earnings expectations a day after Home Depot missed. Lowe's also announced it was buying a bigger building-products company than its rival did in June.
The Home Depot, Inc. (NYSE:HD ) Q2 2025 Earnings Conference Call August 19, 2025 9:00 AM ET Company Participants L - Corporate Participant e - Corporate Participant s - Corporate Participant a - Corporate Participant R - Corporate Participant h - Corporate Participant e - Corporate Participant v - Corporate Participant Ann-Marie Campbell - Senior Executive Vice President Edward P. Decker - Chairman, President & CEO Isabel Janci - VP of Investor Relations & Treasurer Richard V.
Homeowners may have reason to be more comfortable financing renovations, but Home Depot isn't counting on a shift in their mindset.
The nation's largest home improvement chain said during an earnings call on Tuesday that pricing changes would affect specific product categories.
Investors are bracing themselves for weak earnings reports from many of the bellwether retail stocks reporting earnings this week. That may explain why investors are mildly bullish on Home Depot NYSE: HD after a better-than-feared earnings report.