Compare The Home Depot, Inc. (HD) vs Lowe's Companies, Inc. (LOW) Stock

Lowe's Companies, Inc. (LOW) offers the better valuation at 22.3x trailing P/E (21.0x forward), making it the more compelling value choice. Analysts rate The Home Depot, Inc. (HD) a "Buy" — based on 61 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Lowe's Companies, Inc. (LOW) is the cheapest at 22.3x versus The Home Depot, Inc. at 26.8x. On forward P/E, Lowe's Companies, Inc. is actually cheaper at 21.0x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Lowe's Companies, Inc. wins at 2.36x versus The Home Depot, Inc.'s 7.07x.

Over the past 5 years, Lowe's Companies, Inc. (LOW) delivered a total return of +76.1%, compared to +61.1% for The Home Depot, Inc. (HD). A $10,000 investment in LOW five years ago would be worth approximately $18K today (assuming dividends reinvested). Over 10 years, the gap is even starker: LOW returned +335.9% versus HD's +257.2%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), The Home Depot, Inc. (HD) is the lower-risk stock at 0.60β versus Lowe's Companies, Inc.'s 0.61β — meaning LOW is approximately 1% more volatile than HD relative to the S&P 500.

The Home Depot, Inc. (HD) is the more profitable company, earning 8.6% net margin versus 7.7% for Lowe's Companies, Inc. — meaning it keeps 8.6% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: HD leads at 12.7% versus 11.8% for LOW. At the gross margin level — before operating expenses — LOW leads at 33.5%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, Lowe's Companies, Inc. (LOW) is the more undervalued stock at a PEG of 2.36x versus The Home Depot, Inc.'s 7.07x. Both stocks trade at elevated growth-adjusted valuations, so expected growth needs to materialise. On forward earnings alone, Lowe's Companies, Inc. (LOW) trades at 21.0x forward P/E versus 25.2x for The Home Depot, Inc. — 4.3x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for LOW: 9.5% to $289.77.

All stocks in this comparison pay dividends. The Home Depot, Inc. (HD) offers the highest yield at 2.4%, versus 1.8% for Lowe's Companies, Inc. (LOW).

For long-horizon retirement investors, Lowe's Companies, Inc. (LOW) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.61), 1.8% yield, +335.9% 10Y return). Both have compounded well over 10 years (LOW: +335.9%, HD: +257.2%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Consumer Cyclical sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.