Buy This, Not That: Earnings Are In – Home Depot vs. Lowe’s?

Shah Gilani|August 20, 2025

Two of the biggest names in home improvement just reported earnings: Home Depot and Lowe’s.

Both stocks jumped. Both issued guidance. Both made major acquisitions this year.

But if you’re thinking about investing in one of these retailers right now… The choice is clear.

In my latest Buy This, Not That, I break down:

• Why one stock rallied despite missing earnings estimates
• Which retailer’s acquisition strategy could pay off (or backfire)
• The dividend edge that tips the scale in favor of one company
• And why, despite the strong moves, neither may be the best place for your capital right now

If you’ve been eyeing the home improvement sector, you won’t want to miss this week’s breakdown.

Click on the thumbnail below to get my take.

Transcript

Hey, everybody. Shah Gilani here with your weekly BTNT – as in Buy This, Not That. Today, I’m going to hit Home Depot and Lowe’s. Both of them had earnings this week.

Lowe’s today and Home Depot the other day, so time to compare. Now first up, I’m a start with a larger company, Home Depot. The market cap on Home Depot, $392 billion. Lowe’s comes in at around $140 billion dollars.

The revenues… Home Depot’s about twice as much as Lowe’s revenues. Home Depot’s revenue is coming in about $162 billion, Lowe’s $83.25 billion. Profit margins are very similar, 8.98% for Home Depot and 8.22% for Lowe’s.

Now what’s important is the earnings because we just got a report from both. So let’s take a look at the chart…

Here’s Home Depot. Quite a move. Now in spite of the earnings missing, Home Depot rose handsomely yesterday.

As you can see, up 3.17% yesterday.

So premarket, it was up about, well, 1.6%. Excuse me, down 1.6%, and then started to move a lot higher that all of a sudden positive, I guess, bids came in. And next thing you know, Home Depot is on a tear higher. So it opened up 1.6% higher after, again, being down in the premarket.

So, that was pretty interesting to see that action go from premarket to market open and then ending the day strong up 3.17%. But the misses were significant in the sense that, well, you know, anytime there’s a miss, especially this earning season, stocks that have missed earnings, estimates have gotten knocked down. So they saw adjusted earnings of $4.68 a share. Now the consensus estimate was for $4.72.

So they missed. Their net sales rose 4.9% to $45.3 billion, but they missed slightly there because analysts had expected $45.4 billion.

What drove Home Depot higher yesterday was the guidance, and the guidance remains strong. Well, I to me, it wasn’t strong, but I think the CEO tried to make it come across strong. But, really, the bottom line was he said, essentially, we have an easy hurdle because their expectations for growth throughout the year end is not that high.

So they think they can beat it. So that that wasn’t encouraging to me, but the market liked to hear the tone of that.

So I think you said something effective. There’s not a big uptake necessary to meet their guidance. So investors like the positive guidance in their opinion. So, that ended up being the story for Home Depot. The only other thing that Home Depot’s got going for is a small but reasonable dividend yield of 2.33% on a forward basis.

But that’s on a 61% payout ratio. So they’ve got room to move a little more, and I think they should. They’ve been making a lot of acquisitions to expand their, building rather than do it yourself home improvement sales. They want to do more professional sales, larger volume, and they’ve been making acquisitions over the last couple years, including an $18 billion acquisition last earlier this year, and a couple others.

So they are, adding to their balance sheet debt, as the case may be. But so far, so good.

Now Lowe’s reported this morning… And you can see right here in the premarket, stock is at 3.37% premarket. It’s about 8:30 a.m. ET as I’m recording this for you all. And yesterday, Lowe’s went up in sympathy with Home Depot.

That was just a sympathetic move. Home Depot rose and Lowe’s followed suit because if you look at the two charts, they’re almost identical in terms of their movement. So Lowe’s looking like it’s going to have a pretty good day today, something equivalent to what Home Depot had yesterday on top of the 2.18% that it did rise yesterday. Now, again, the quarterly revenue growth year over year is not so good, but this seems to be getting better.

But as far as this reporting period, the EPS came in at $4.33, versus $4.24 was the consensus. So $4.33 beating $4.24 on the estimates. The revenue really came in right in line, $23.96 billion for the quarter. Now considering what Home Depot has been doing to expanding its professionals, sales, Lowe’s is now doing the same thing.

And this morning, announced, a deal to acquire foundation building materials for $8.8 billion. They’ve made some other acquisitions this year also. So what they’re trying to do is bump up their professional business, do more volume, and that’s all good. But, the guidance also remains strong throughout the end of the year.

Actually, they bumped it a little bit higher than was expected.

It’s still not rip roaring, but they just bumped it up a little bit.

But they, at the same time, said that the EPS could be down, by the slightly by year end. So, a bit of a mix back there, but it doesn’t matter. Market seems to like it and investors seem to like both Home Depot and Lowe’s. So here’s my supposition. If you want to buy one or the other, buy Home Depot. And the only reason there is because the stocks move so similarly.

The only reason there is over the last three years, Home Depot is up 47%, while Lowe’s is up 39%. And you get a 2.33% yield on your Home Depot stock and 1.91% yield forward basis on your Lowe’s stock. So yeah, it just I give Home Depot the edge, but all I got to say is that three years of 47% and, three years for Lowe’s up 39% when, not this year, but 2023 and 2024, markets were up almost 25% a year.

Left these two in the dust. So, if I was going to buy one, it’ll be Home Depot, not Lowe’s. But, frankly, I think for your capital allocation purposes, neither one of them is that exciting to me. And that’s it for today. Sorry to let you, do it yourself home builders down, but, there you go. Cheers, everybody. Catch you next week.