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Home Depot vs. Lowe’s: Both Stocks Are Slumping, So Which One Should You Buy?

Joel Anderson
Carpenter selecting wood in a hardware store or warehouse standing looking at cut lengths on a rack, side view.

On Wednesday, shares in Lowe’s and The Home Depot were slumping after disappointing housing market data led a key analyst to downgrade his ratings and slash price targets, and both stocks continued the slump into a second day on Thursday. On the whole, both stocks have dropped steadily off of highs reached in September, with Home Depot down 15.62 percent since Sept. 11 and Lowe’s down 14.66 percent since Sept. 21.

However, if you feel like this year’s hurricane season might produce a boost in sales while North Carolina and Florida rebuild — Home Depot estimated an additional $650 million-plus in business last year due to hurricane-related sales — now might be just the time to buy the dip.

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But which stock from a retailer of home improvement supplies stands to boost your portfolio more in the long run? Take a closer look.

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Home Depot vs. Lowe’s Stock Comparison

Here’s a basic comparison of Home Depot vs. Lowe’s:

Home Depot Lowe’s
Share Price $180.44 $99.71
Market Cap $206.4 billion $80.9 billion
2017 Revenue* $100.9 billion $68.6 billion
2017 Profits* $8.6 billion $3.4 billion
2017 Revenue Growth* 6.67% 5.54%
2017 Profit Growth* 8.46% 11.4%
GOBankingRates’ Evaluation $88.1 billion $53.1 billion
P/E Ratio 21.28 20.97
P/S Ratio 1.98 1.15
Stock Gain/Loss Last Month -13.42% -12.34%
Stock Gain/Loss Last Year 12.85% 25.23%

* The fiscal year for Home Depot ended on Jan. 28; for Lowe’s, it ended on Feb. 2.

Why You Might Pick Home Depot:

  • Home Depot has increased both revenue and profits consistently over the last four years, boosting net income by 36.01 percent from 2014 to 2017.
  • Home Depot’s 2.14 percent dividend yield edges out Lowe’s at 1.82 percent.
  • Home Depot’s profit margin of 9.45 percent is significantly better than the 5.58 percent posted by Lowe’s.

Why You Might Pick Lowe’s:

  • Although Lowe’s saw less growth in profits from 2014 to 2017, it does edge Home Depot in revenue growth during that period with sales growing 22.05 percent.
  • P/E ratio is almost identical for each stock, but Lowe’s P/S ratio comes in at just 1.15 to 1.98 for Home Depot.
  • Lowe’s holds significantly less debt, leading to about four times as much shareholders’ equity for Lowe’s — $5.9 billion to Home Depot’s $1.5 billion — and a much lower P/B ratio — 13.99 to Home Depot’s 102.81.

Also Consider: 21 Cheap Alternatives to Big-Name Stocks

The Final Word on Home Depot vs. Lowe’s

Home Depot is the larger of the two companies and, in addition to more profits, has better profit margins and more profit growth over the last four years. However, it has significantly more debt than its smaller competitor and higher price ratios when comparing sales and book value.

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This article originally appeared on GOBankingRates.com: Home Depot vs. Lowe’s: Both Stocks Are Slumping, So Which One Should You Buy?