Home Depot & Lowe's Earnings: Turnaround Time?

Globe and Mail

a day ago

Lowe's LOW and Home Depot HD reflect a notable pairing in the market, with competition remaining fierce between the two over the years.
Both companies have operated in a challenging environment over recent periods, with consumers pulling back big on big-ticket items and other expensive materials needed for home improvement after a big-time surge during COVID.
Both stocks have tracked each other in 2025, with both underperforming relative to the S&P 500.
With both companies on the reporting docket this week, let's take a closer look at what analysts are expecting.
Analyst Estimates Remain Stable
Interestingly, analysts have remained silent concerning the EPS and sales revisions for both companies over recent periods, with both EPS and sales expectations primarily unchanged. Nonetheless, LOW is expected to see 1.5% EPS growth on 3.4% higher sales, with the estimates for HD suggesting a 5.4% climb in EPS on 1.0% sales growth.
So, while the profitability picture appears more constructive for HD, LOW is still expected to see more top line momentum throughout the period, perhaps a key differentiator given the recently subdued consumer. It's also worth noting that LOW has strung together three consecutive beats relative to our consensus estimates, whereas HD fell short in the latest print.
But while LOW is expected to see stronger sales growth, HD's top line has overall showed much more resilience over recent periods, with YoY growth rates turning positive after declines throughout the end of 2023 and most of 2024. Below is a chart illustrating the YoY change in HD sales.
LOW's YoY sales growth rates have largely remained negative over recent periods, with the company's sales declining YoY each period since the beginning of 2023.
EPS results have painted the same story, with HD's YoY EPS growth rates also eclipsing those of LOW regularly over recent periods. Concerning the valuation picture, HD shares presently trade at a 25.3X forward 12-month earnings multiple, a 29% premium relative to LOW's 19.6X.
But while the multiple for HD remains considerably richer, the stock has historically traded at a decent premium relative to LOW over the years, as we can see below.
In addition, LOW's comparable store sales, a key metric for retailers, declined 1.7% year-over-year throughout its latest period, whereas HD saw a smaller 0.3% drop. Both companies reaffirmed their current year outlooks following the latest releases, helping explain the stable nature of both the EPS and sales revisions trends since.
Putting Everything Together
Both Lowe's LOW and Home Depot HD are on the reporting docket this week, with each regularly speaking on the state of the consumer concerning their big-ticket items over recent years. Consumers flocked to the home improvement retailers in the COVID era, taking on big projects and other similar things thanks to muted interest rates.
And given that interest rates have shot through the roof since, it's resulted in much softer demand for both companies. Both companies are in a very similar situation, also explaining their mirroring share performance in 2025.
Guidance will be the key factor for both stocks' post-earnings, with Home Depot's initial release providing big read-throughs of what to expect for LOW the following day. Both stocks remain a Zacks Rank #3 (Hold). But while they've operated in a challenging environment, the worst could be close to behind, reflected by each company's share strength off 2025 lows.
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