Buy This, Not That: Which Stock Wins The Home Improvement Showdown

Shah Gilani|February 26, 2025

While Nvidia’s earnings may grab most of the attention…

Many of you have asked about two recent earnings winners: Home Depot (HD) and Lowe’s (LOW).

With housing shortages and interest rate uncertainty, it makes sense that folks want to know about home improvement stocks, especially given their premarket pops.

However, I think everyone is glossing over something when they take the earnings at face value.

Because as you’ll see in this week’s video, sales were good. But when you put them in context… not so much.

Get all the details in this week’s “Buy This, Not That” video.

Click on the thumbnail to dive in.

Note: These two stocks will get a boost from DIY projects as spring arrives… but they’re not my favorite plays for this time of year. I’m about to send out details on my No. 1 play for March… which has averaged 140% each March for the last 5 years… while the S&P has managed a paltry 0.4%! See how to get in on it here.

TRANSCRIPT

Hey everybody.

Shah Gilani here with your weekly BTNT, as in buy this, not that.

Well, we’ve got a couple of home improvement companies, the two big boys with earnings out already.

So Home Depot reported earnings yesterday and Lowe’s reported this morning.

I’m gonna hit Home Depot versus Lowe’s for your BTNT this week.

First up, I’m gonna hit, yeah, yesterday’s winner because they guided poorly…but everybody liked something.

I didn’t particularly think anything was very good.

But there was enough little beats in terms of Home Depot’s earnings where the stock rose nicely yesterday.

Now, here it is this morning.

I’m showing you Home Depot here just after the open, 10 a.m. We are down just a little bit here.

But the interesting thing about Home Depot’s earnings was, for me, the guidance was soft and also considered to be “conservative.”

So investors took that forward guidance as being a little soft conservative, according to management. So, they think they’re really gonna do better. And that’s what really helped the stock yesterday.

But as far as earnings go, yeah. Again, we had the stock up 2.84% yesterday while the S&P 500 was down. That’s good news for Home Depot investors.

It also hit support. The stock also hit support a couple of days before and broke through it.

They’ve got support here (~$380), which they broke through. And then yesterday, nice earnings (brought them) right back up. So, again, we got some support down here for Home Depot, around $380 I’ll call it.

So, that’s important because we’re bouncing off that…bouncing off the 200-day (moving average), and the earnings certainly helped.

Same-store sales were positive for the first time in two years. That went a long way with investors. It doesn’t go a long way with me.

It’s one out of quite a few quarters. So, I’m not overly impressed with it.

Fourth quarter, same-store sales up 0.8%. What investors liked about that was analysts were expecting them to be down 1.5%. So, a pretty handsome beat there for our same-store sales.

As far as quarterly sales, Home Depot hit $39.7 billion in the quarter. Estimates were for $39.2 billion. So you had a little beat there.

Was that an impressive beat? No. A beat still a beat, people.

Look. We have a trailing 12-month revenue of $154 billion, with a profit margin at Home Depot of 9.45%.

So it’s got a lot going on. It kinda got a huge debt load.

The takeaway for most people was the headline adjusted earnings came in at $3.13. The consensus estimate was for $3.04.

So, you had the move, and there it goes. So, is Home Depot a buy here versus Lowe’s?

We’ll take a look in a second, but I’m gonna just leave you with this, which we may come back to.

This is support here ($380).

Okay?

So, it’s not a bad place to take a stand. And if the earnings were better than expected, which they were for the most part, though not necessarily blow-out earnings by any stretch, and guidance was soft with a conservative bent, meaning we think we can actually do better, then not a bad place.

So that’s to keep in mind with Home Depot.

Now, Lowe’s, on the other hand, reported this morning, again, better than expected numbers. The stock is up 1.41%.

This is a pretty nice move. But first thing I’m gonna point to before I talk about earnings and numbers is this.

This is pretty ugly sell off. There was support here (~$245).

There should have been some support here in the short term for lows. Yet, it broke right through it.

That to me is a little bit scary.

Now, Lowe’s again, the premarket had it up 3.5% on the earnings news, which came before the bell. So here we are.

The market is now open. We’ve gone from up 3.5% on Lowe’s in the premarket to up only 1.5%.

That’s a big give back there in terms of what investors really think.

A couple of things here.

Trailing 12-month sales for Lowe’s were $83.72 billion.

The profit margin was 8.19%. Not quite as robust as Home Depot’s 9.45%.

They beat estimates. Fourth quarter earnings, estimates were for a $1.84. They came in at $1.93. Hence, the stock is being rewarded.

And as far as revenue, again, similar to Home Depot, they had a slight beat.

Estimates were for $18.3 billion in the quarter. They came out with $18.6 billion.

But in the battle of Home Depot versus Lowe’s, I look at Lowe’s and I said, this stock has not fared well.

It would hopefully have caught some support here.

So, the earnings gave it a little bit of a pop back up. But this is a little bit ugly to me – more than I want to deal with.

Yes. This is a nice move, and we’re gonna see a little bounce here. But we’ve already given up some of the bounce that we saw on the premarket.

So, as far as Lowe’s versus Home Depot, this chart alone tells me, I’m not gonna put my money in here.

If I’m looking for a trade in one of these two, it’s not gonna be Lowe’s people. It’s gonna be in Home Depot.

Because as long as Home Depot can just move around and stay above that support, then it’s a better trade to have.

Are either one of these long-term holds for me? No.

But as far as looking at them, and a lot of you have asked me about them, knowing that the earnings were coming up, I’d buy Home Depot over Lowe’s.

That’s it for today.

I will catch you guys next week. By the way, got NVIDIA earnings coming out this afternoon.

Be careful out there.