The Home Depot, Inc. (HD), Lowe’s Companies, Inc. (LOW), Sherwin-Williams Company (SHW): Which of These 3 Companies Is Best Positioned to Profit From Housing?

Improved prospects in the housing sector isn’t good news for just companies in home sales and housing starts, it also means a slew of profits for The Home Depot, Inc. (NYSE:HD), Lowe’s Companies, Inc. (NYSE:LOW), and Sherwin-Williams Company (NYSE:SHW).

The firms were hammered down during the recession, but are picking up along with the increase in the number of housing starts. It should be noted that while housing starts fell in April (the most recent numbers), the figures were likely just a blip, and major profits are ahead. But which renovation company is ready to make the most profits?

An argument for Home Depot

While the rise in share price has been relatively steep for The Home Depot, Inc. (NYSE:HD) in the last year, the company is the world’s number one home improvement retailer and could benefit the most from the housing recovery. The top rating is an achievement that no other in the industry can boast, and it is because of sound business practices that the company was able to rapidly establish that position. That means the firm could be in the best position to make intelligent managerial decisions to capture the growing renovation market.

The brand, and its stores, are spreading like wildfire, and I suspect that if the recession hadn’t hit, the company would already be priced well over $100 per share. In May, the company reported net earnings growth in the first quarter of 18.5%, compared to the same period last year. Net sales increased 7.4% year-over-year. Company executives anticipate a 17% earnings per share growth at the end of this year, which is an indication that The Home Depot, Inc. (NYSE:HD) representatives also consider April’s housing data to be an anomaly.

An argument against Lowe’s

While investors would have been better off getting in on these stocks earlier, they now have the advantage to see which company is set to profit the most. Lowe’s Companies, Inc. (NYSE:LOW) first-quarter report wasn’t nearly as attractive as Home Depot’s, and the lack of profits could be a sign of where people are going for their renovation projects. In fact, while Home Depot experienced soaring revenue, Lowe’s Companies, Inc. (NYSE:LOW) was down 0.5% from the same period last year. The company was over $300 million off of the analysts’ consensus estimate.