Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The Home Depot, Inc. (HD) Paints A Pretty Picture: Lowe’s Companies, Inc. (LOW), Sherwin-Williams Company (SHW)

Page 1 of 2

Google News is showing reports that home prices capped off 2012 with the biggest rise in six years. The economy finally  seems to be slowly turning around and headed in a positive direction. Some earnings from home improvement stores were disappointing in the fourth quarter, yet one company showed very positive results.

Lowe’s Companies, Inc. (NYSE:LOW) seemed to benefit from the aftermath of Hurricane Sandy, and appears to be able to maintain pricing as gross margins remained relatively flat. Despite better than expected earnings, it seems as though disappointing guidance for 2013 either matched or trumped fourth quarter earnings. The company’s P/E is 21.3, or 1.5 below the industry average. Although Lowe’s revenues decreased slightly in the fourth quarter, net income rose approximately 31%. The company does seem fairly priced, with a 5.9% Free Cash Flow (FCF) yield.

The Home Depot, Inc. (NYSE:HD)With earnings rising and lower guidance moving forward, it is impressive how closely related Lowe’s is to its largest competitor. To me, the most impressive accomplishment of Lowe’s this quarter was the ability to maintain its gross margins. The company’s largest competitor is more than twice its size and has far more distribution power. Normally when The Home Depot, Inc. (NYSE:HD) is performing well, Lowe’s suffers, and vice versa.

The Home Depot, Inc. (NYSE:HD) posted excellent results this past quarter, including a 34% increase in its quarterly dividend. Investors seeking dividend consistency should look no further. This marks the 104th consecutive quarterly dividend by the company, and it just authorized a $17 billion buyback through 2015. The Home Depot, Inc. (NYSE:HD) saw same-store-sales increase by approximately 7%, and net earnings were 29% higher than the year-ago quarter. Although Lowe’s FCF yield is nearly 1% higher, Home Depot’s earnings yield is 3% higher than Lowe’s. Surprisingly, Home Depot’s P/E is 22.7, 1.4 higher than Lowe’s.

Despite The Home Depot, Inc. (NYSE:HD) having emphasized its paint departments in recent years, competitor Sherwin-Williams Company (NYSE:SHW) still holds an estimated market share of 30% and is the clear leader in the domestic paint market. Sherwin Williams is the smallest of these three companies, showing a market cap of just over $16 billion and 3,400 company-owned stores. The Home Depot, Inc. (NYSE:HD) and Lowe’s have approximately $101 billion and $41.6 billion market caps, respectively. With an earnings yield of just 3.6%, the company also shows a low FCF yield of 4.4%.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!