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MarketScreener Homepage  >  Equities  >  Nyse  >  The Home Depot, Inc.    HD

THE HOME DEPOT, INC.

(HD)
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Home Depot Starts Looking Better Equipped Than Lowe's -- Heard on the Street

11/18/2020 | 12:43pm EST

By Jinjoo Lee

While both Home Depot and Lowe's were clear retail winners this year, the latter has arguably benefited more thanks to a less urban footprint and a higher proportion of do-it-yourself customers. That may be a winning formula today, but Home Depot is the one that seems poised for more upside post-pandemic.

That isn't to dismiss the gains that both retailers have seen. Neither experienced much of a slowdown in sales growth last quarter, as consumers continued spending more time and money on their homes.

Home Depot's revenue rose 23% from a year earlier in its third quarter, basically the same growth it enjoyed the prior quarter. Lowe's saw sales increase 28% in its latest quarter, after growing 30% in the previous period. Both results were above analyst expectations. Outdoor and garden categories proved popular; Home Depot noted that its 12-foot skeletons sold out before October.

Sales to DIY customers have been growing faster for Home Depot and Lowe's compared with professionals such as general contractors and renovators, providing a larger sales uplift to Lowe's, which focuses more on that kind of customer. Lowe's also has less exposure to urban markets, where people were initially more skittish about stepping foot inside stores due to the coronavirus pandemic.

That has been reflected in the share price movement: Lowe's was trouncing Home Depot by as much as 16.7 percentage points earlier this year, but the gap has narrowed considerably. Today, their share-price performance looks pretty much the same year-to-date.

Positive vaccine developments allow for a possibility that people will spend less time at home sooner than expected, and Home Depot is the one that would benefit more from that scenario. Urban stores are set to rebound -- already, sales growth in big-city stores are starting to outpace rural ones, as Lowe's noted during its Wednesday earnings call.

Plus, there is likely pent-up demand for professional customers, who have been seeing muted demand for jobs because people remain cautious about allowing strangers into their homes. Both Lowe's and Home Depot are making investments in that market, but Home Depot is clearly ahead, especially now that it is buying back facilities management company HD Supply. While HD Supply has been surprisingly resilient this year, it has seen weakness from hospitality customers; a gradual return to normal should bring back some of that business.

A retooling seems to be in order.

Write to Jinjoo Lee at jinjoo.lee@wsj.com

(END) Dow Jones Newswires

11-18-20 1242ET

Stocks mentioned in the article
ChangeLast1st jan.
HD SUPPLY HOLDINGS, INC. 0.21% 55.99 End-of-day quote.0.00%
LOWE'S COMPANIES, INC. 0.52% 173.29 Delayed Quote.7.37%
THE HOME DEPOT, INC. 1.81% 284.11 Delayed Quote.5.06%
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More news
Financials (USD)
Sales 2021 130 B - -
Net income 2021 12 753 M - -
Net Debt 2021 27 357 M - -
P/E ratio 2021 23,6x
Yield 2021 2,16%
Capitalization 300 B 300 B -
EV / Sales 2021 2,52x
EV / Sales 2022 2,52x
Nbr of Employees 415 700
Free-Float 60,1%
Chart THE HOME DEPOT, INC.
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The Home Depot, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends THE HOME DEPOT, INC.
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 33
Average target price 306,54 $
Last Close Price 279,05 $
Spread / Highest target 27,2%
Spread / Average Target 9,85%
Spread / Lowest Target -24,7%
EPS Revisions
Managers and Directors
NameTitle
Craig A. Menear Chairman & Chief Executive Officer
Edward P. Decker President & Chief Operating Officer
Richard V. McPhail Chief Financial Officer & Executive Vice President
Matthew A. Carey Chief Information Officer & Executive VP
Paul Antony Senior Vice President-Technology
Sector and Competitors
1st jan.Capitalization (M$)
THE HOME DEPOT, INC.5.06%300 425
LOWE'S COMPANIES, INC.7.37%126 277
KINGFISHER PLC0.89%7 875
HOME PRODUCT CENTER2.19%6 151
SIAM GLOBAL HOUSE PUBLIC COMPANY LIMITED12.35%2 809
BHG GROUP AB-3.24%2 267