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Route to Super Bowl dangerous for Mexico's avocado haulers
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Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Know Your Profit Potential BEFORE You Trade! (Ad)pixel
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Know Your Profit Potential BEFORE You Trade! (Ad)pixel
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Know Your Profit Potential BEFORE You Trade! (Ad)pixel
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
Cash Holders STILL Aren't Taking Steps to Prepare (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office

Why Lowe’s Is Up And Home Depot Down 

Key Points

  • Lowe's moves higher while Home Depot moves lower on similar results. 
  • Lowe's position with DIY has it set up for a better 2023. 
  • Lowe's dividend is more attractive because the growth is more reliable. 
  • 5 stocks we like better than Lowe's Companies
Why Lowe’s Is Up And Home Depot Down 

Lowe’s (NYSE: LOW) is up strong following a solid report that was foreshadowed by Home Depot (NYSE: HD). Home Depot gave a better-than-expected report driven in large part by strength in the DIY channels and Lowe’s has more exposure to those channels. With the coming (current) quarter expected to be weak, inflation still on the rise, and interest rates as well it is logical to think there will be a slowdown in professional demand. The latest report from D.R. Horton, the nation’s largest home builder, is more evidence of the same. Negative sales growth and declining backlog point not just to slower professional demand but a potentially deep contraction in it; that’s why Lowe’s is up and Home Depot is down. That, and it offers value while paying a healthier-looking dividend as well. 

Lowe’s Outshines Home Depot In Q3 

Lowe’s Q3 results matched Home Depot’s in that it beat the top and bottom line consensus estimates but it outshines its competitor in the arena of guidance. The company was able to raise its guidance for revenue and earnings while Home Depot only reaffirmed the prior outlook. At the same time, Lowe’s also increased its share repurchased plans for the year by $1 billion or about 0.75% of the pre-release market cap. 

Regarding the Q3 results, Lowe’s revenue came in at $23.48 billion, up 2.4% from last year, and beat the Marketbeat.com consensus figure by 140 basis points as well. The gains were driven by a 2.2% increase in system-wide comps and a 3.0% increase in the US which is surprisingly driven by a 19% increase in the Pro channel. The DIY channel is down on a YOY basis compared to last year’s stimulated quarter but the company reports “trends are improving”. 


Lowe’s earnings were strong as well. The company reported a large decline in GAAP margin but this is due to a non-cash asset charge related to the Canadian business and had little impact on actual operations. The adjusted margin improved “substantially” on a sequential basis and helped to drive outperformance on the bottom line and improved guidance as well. On the bottom line, Lowe’s reported $3.27 in adjusted EPS which is up nearly 20% YOY, aided by share repurchases, and $0.18 or 860 bps better than expected. As for the guidance, the company raised its outlook for FY2022 earnings to a range with the low end a nickel above the previous high end and more than a dime above the consensus estimate. 

Lowe’s, A More Reliable Dividend Grower 

Home Depot pays a higher yield at roughly 2.45% but there are factors that make Lowe’s payment far more attractive. Not only does Lowe’s 2.0% come at a lower valuation, 15X compared to 18X, but it is a more reliable dividend grower. Home Depot has been increasing its payout for only 12 years because it did not issue any increases during the great recession. Lowe’s, on the other hand, has increased its payout every year without fail for the last 59 years and the metrics suggest a few more decades are coming at least. The company’s payout ratio is low at 27% and the balance sheet is healthy so there is no reason to think distribution increases will end any time soon. 

Lowe’s shares rose nearly 5.0% in the wake of the Q3 report and they may move higher. Home Depot shares, on the other hand, are capped at the post-release high and seem to be having a hard time holding the level. If the market follows through on this disparity, Lowe’s shares should move up and outside the recent trading range while Home Depot will continue to lag as it has done since the pandemic bottom. 
Why Lowe’s Is Up And Home Depot Down 

Should you invest $1,000 in Lowe's Companies right now?

Before you consider Lowe's Companies, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Lowe's Companies wasn't on the list.

While Lowe's Companies currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Home Depot (HD)
2.793 of 5 stars
$331.50-2.4%2.29%19.98Moderate Buy$341.24
Lowe's Companies (LOW)
2.4222 of 5 stars
$215.97-2.5%1.94%21.15Moderate Buy$229.12
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.

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