Is Now the Time To Buy This Home Improvement Company? – The Home Depot, Inc. (HD), Lowe’s Companies, Inc. (LOW)

Furthermore, the gross margin at The Home Depot, Inc. (NYSE:HD) was 60 basis points higher than at Lowe’s Companies, Inc. (NYSE:LOW). It has also managed to bring down costs, and its buybacks shows that the company is optimistic about the future.

A look at some peers

Steadily moving forward, The Home Depot, Inc. (NYSE:HD) is gaining a monopoly over housing solutions. Other followers like Menard and True Value are smaller players in the race.

According to sales, Menard is believed to be the third largest home improvement company in the US, after Home Depot and Lowe’s. It was also ranked 42nd on Forbes list of “America’s Largest Private Companies” in 2009. On the other hand True Value (formerly TruServ) is relying on the true value of service. It serves more than 5,000 retail outlets in some 54 countries.

Both these companies are not publicly traded. Looking at the present statistics, Home Depot holds a firm market position with no potential danger from its peers.

The disguised boon

While residents of New York and New Jersey experienced the pain of Hurricane Sandy, it proved to be a disguised boon to Home Depot’s sales figures, as the company benefited from increased sales of products for aiding in recovery.

It was noted during the earnings release that the New Jersey and New York regions were the company’s best performing areas, as customers purchased products for repairing and rebuilding. The increased sales due to Hurricane Sandy were approximately $242 million. Also, the company expects to see continued sales due to the Hurricane through the first half of the year, said the Executive Vice President of Merchandising, Craig Menear.

More saving. More doing.

Other negatively affected areas of the U.S., like Florida, California and Arizona, are experiencing recovery. However, the company does not expect to see the housing market fully recover in 2013. Home Depot’s sales in Canada and Mexico performed well, with the company now having 100 stores in Mexico. The company has plans to continue expanding its appliance product offering in 120 more stores in 2013.

It reported plans of operating margin expansion of approximately 65 basis points with share repurchases of approximately $4.5 billion, capital spending of approximately $1.5 billion, and cash flow from the business of approximately $7.2 billion for the fiscal 2013.

Analysts summarize that under the leadership of CEO Frank Blake, Home Depot is simply a much better-run company than Lowe’s. Other catalysts that have worked for the company includes better locations, a more aggressive buyback program, and its increased dividend.

All in all, I’m looking forward to some good returns from the company’s high performance. Home Depot leaves a strong impression on investors by truly living up to its tagline ‘More saving, More doing.’

The article Is Now the Time To Buy This Home Improvement Company? originally appeared on and is written by Rishabh Jain.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.