Lowe’s (LOW) and Home Depot (HD), the two most well-known home improvement retailers, have been stagnant for years.
Not only are both stocks trading lower over the last 52 weeks (HD by 18.2% and LOW by 11.6%), but they’re also stuck below their 2021 highs (HD by 15.5% and LOW by 6.2%).
And it doesn’t look like the companies expect that to improve much next year, as Home Depot just reaffirmed its FY 2026 (ending in February) growth projections (flat) and offered similar guidance for FY 2027 as well (EPS growth between 0% and 4%; comparable-store sales growth between 0% and 2%; total sales growth between 2.5% and 4.5%).
Lowe’s is also expecting flat sales growth in its current fiscal year, and analysts are anticipating more of the same next year.
One of the primary culprits for the lack of growth is a housing market that’s frozen due to a combination of high mortgage rates and stubbornly high prices.
An estimated 52.5% of homeowners are effectively locked into sub-4% mortgage rates and have either no interest or no opportunity to move on, leading to transaction volumes at multi-decade lows.
A frozen housing market means that prospective sellers are less inclined to update or improve their properties ahead of sales, and that subsequent lack of sales translates to fewer buyers needing to do their own upgrades – and thus fewer buyers needing to spend money with the aforementioned home improvement retailers.
And despite the recent (and possibly pending) Fed rate cuts, mortgage rates remain stubbornly high, as they respond more to the market-driven 10-year Treasury yield than they do to the federal funds rate.
On that front, Goldman Sachs expects 10-year Treasuries to remain near their current yields (4.1%) through 2027, which would hold 30-year mortgage rates north of 6% for the foreseeable future.
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So, if we can’t count on a return of go-go growth for Lowe’s and Home Depot, let’s take a look at some fundamental metrics and see which home improvement stock offers the most value.
Tale of the Tape: Lowe’s (LOW) vs. Home Depot (HD)
Trailing P/Es: LOW 20.1, HD 24.0
Forward P/Es: LOW 18.5, HD 22.4
Price/Sales: LOW 1.65, HD 2.1
Cash per share: LOW $1.11, HD $1.69
Institutional ownership: LOW 80%, HD 74%
Dividend yield: LOW 2.0%, HD 2.6%
As you can see above, Home Depot is the more richly valued of the two names, trading at 24.0 times trailing earnings and 22.4 times forward earnings.
At the same time, neither firm offers a particularly attractive balance sheet, holding only a buck (and change) in cash per share while also carrying a hefty amount of debt (Home Depot has $66 billion in total debt compared to Lowe’s $44.7 billion).
Those debt levels aren’t catastrophic (both companies have current ratios above 1, which means they can cover short-term debt), but high levels of total debt in a weak environment could lead to cost-cutting measures like layoffs or store closures down the line (in the end of October, Home Depot announced plans to close an HD Supply distribution center in Tennessee; Lowe’s hasn’t announced any such measures this year).
Just based on the numbers above, Lowe’s looks like the more value-oriented buy, and the higher level of institutional ownership may reflect that.
That being said, the value characteristics don’t exactly make the company a screaming buy.
One long-term differentiation factor for the two companies is spending by professionals, where Home Depot has had a long-standing advantage.
It’s been an area of focus for Lowe’s, but the company has yet to generate meaningful results.
There was an unsuccessful multi-year branding initiative, “Lowe’s for Pros,” which gave way to an “MVPs Pro Rewards” program, which was itself rebranded as “MyLowe’s Pro Rewards” earlier this year.
So, where does that leave us when it comes to Lowe’s vs. Home Depot as the better investment?
In years past, I’d have given the nod to Home Depot based on pro spending and the more attractive dividend.
But Lowe’s has made up a bit of ground on the dividend front, now offering a 2% yield vs. HD’s 2.6% yield.
That leaves us balancing Lowe’s more appealing 1.65 price-to-sales ratio and five-year stock returns (53% gains for Lowe’s vs. 31% gains for HD) against Home Depot’s edge with professionals.
At the end of the day, Lowe’s lower multiples and higher level of institutional sponsorship are enough to tip the scales in its favor.
I still prefer to do my DIY shopping at Home Depot, but I’d pick LOW for my portfolio.
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*This post has been updated from a previously published version.
