Home Depot Vs. Lowe's Stock: Which is the Better Investment as Q4 Results Roll Out?

Investors are getting more insight into the strength of the consumer and the home building market as Home Depot HD released its Q4 results this morning with Lowe’s LOW report scheduled for Wednesday, February 26.Able to exceed Q4 expectations, Home Depot shares spiked nearly +3% in today’s trading session with Lowe’s stock up +2%.  Home Depot’s Q4 Results Optimistically, Home Depot’s Q4 sales of $39.7 billion increased 14% year over year from $34.78 billion in the comparative quarter and topped estimates of $39.14 billion.Still, Home Depot stated that during the quarter, higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects.Able to navigate what it called a unique environment while executing at a high level, Home Depot’s Q4 EPS of $3.13 beat expectations of $3.04 by 2.96% and rose 11% from $2.82 per share a year ago. Furthermore, Home Depot has now exceeded the Zacks EPS Consensus for 19 consecutive quarters dating back to August of 2020.Image Source: Zacks Investment Research Lowe’s Q4 Expectations Based on Zacks estimates, Lowe’s Q4 sales are thought to have dipped 1% to $18.35 billion compared to $18.6 billion in the prior year quarter. However, Lowe’s Q4 earnings are slated to rise 3% to $1.83 per share from EPS of $1.77 in the comparative period.More intriguing, Lowe’s has exceeded bottom line expectations for 22 consecutive quarters dating back to August of 2019.Notably, the Zacks ESP (Expected Surprise Prediction) does indicate Lowe’s could once again surpass earnings expectations with the more recent analyst revisions and Most Accurate Estimate having Q4 EPS at $1.85 and 1% above the Zacks Consensus.Image Source: Zacks Investment Research Stock Performance & Valuation Comparison Considering their leadership and consistency in the home improvement market, Home Depot and Lowe’s stock trade at reasonable forward earnings multiples of 24.4X and 18.9X, respectively.While Home Depot’s top and bottom lines are more robust, Lowe’s trades beneath the benchmark S&P 500’s average of 22.5X forward earnings and at a nice discount to their Zacks Retail-Home Furnishings Industry average of 22.1X. Plus, Lowe’s trades under the optimum level of less than 2X sales with Home Depot at 2.4X.Image Source: Zacks Investment ResearchOver the last year, Home Depot stock is up +6% to edge Lowe’s +5%, although both have trailed the benchmark’s +19%. In the last three years, Home Depot’s +24% gains have noticeably trumped Lowe’s +9%, but these performances have been subpar to the S&P 500 as well.Image Source: Zacks Investment Research HD & LOW Dividend Comparison Making up for their lagging price performances is that Home Depot stock has a 2.35% annual dividend with Lowe’s yield at 1.94%. These payouts top the S&P 500’s 1.21% average with it noteworthy that Home Depot’s yield is above their industry average of 2.13%.  Image Source: Zacks Investment Research Bottom Line At the moment, Home Depot and Lowe’s stock land a Zacks Rank #3 (Hold). Holding positions in either of these home improvement retailers could be rewarding for long-term investors. That said, there may still be better buying opportunities ahead amid recent market volatility and macroeconomic uncertainty. Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lowe's Companies, Inc. (LOW): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks