The Home Depot, Inc. (HD), Lowe’s Companies, Inc. (LOW): 1-Year Rematch

Lowe’s has also had steady price appreciation, with a total return of 21% over the past year.

Lowe’s has been downgraded by two different analysts in 2013, from Buy to Hold by Stifel Nicolaus and from Hold to Sell by Canaccord Genuity

Both companies are heavily dependent on the continued recovery of the housing market, which looks good in many parts of the country.

I don’t doubt that both companies are great and will continue to reward shareholders in the future. Neither seems to offer much in the way of potential price appreciation for 2013, however, as their stock prices seem to already include 2013 growth.

I think the valuation for The Home Depot, Inc. (NYSE:HD) is high, and I would wait for a pullback to buy. The current PE is 20.8, and Home Depot’s five-year average PE is 18, so I would like to see the PE more inline with its historical average.

Lowe’s current valuation seems more reasonable, at 18.1, and its five-year historical PE average is 17.1. Lowe’s is fairly attractive at this price level.

So at this point, I like Lowe’s Companies, Inc. (NYSE:LOW) better than Home Depot. Which is the same conclusion I came to last year, and which turned out to be wrong. That fact doesn’t make me change my mind, though.

The article Home Depot vs Lowe’s One-Year Rematch originally appeared on

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