Home Depot vs. Lowe’s: Which Home Improvement Giant Is the Better Value?

Key Takeaways:

• Home Depot is the larger of the two, generating $164.7B in fiscal 2025 revenue with roughly half of its sales coming from professional contractors. Lowe’s reported $86.3B over the same period, with a customer base that leans more heavily toward do-it-yourself homeowners.
• Analysts expect both companies to grow revenues at a mid-single-digit pace, with HD forecast at around 4% annually and LOW at around 6%, but operating margins for both remain near 12%, and free cash flow continues to reflect the ongoing softness in the housing market.
• Based on our valuation assumptions, HD stock could reasonably reach around $420 per share by early 2029 for a total return of around 33%, while LOW could reach around $296 over the same period for a total return of around 31.5%.

Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>

What’s Happening?

Home Depot (HD) is the largest home improvement retailer in the United States. The company operates around 2,300 stores and reported $164.7B in fiscal 2025 revenue. Its customers include both homeowners and professional contractors such as plumbers, painters, and remodelers. About half of HD’s sales come from that Pro segment, so the company has invested heavily to serve it.

Lowe’s (LOW) is the second-largest home improvement chain in the United States. It operates around 1,700 stores and reported $86.3B in fiscal 2025 revenue. The business leans more toward DIY consumers, but CEO Marvin Ellison has been pushing harder into the professional market.

Lowe’s recently expanded its Synchrony financing partnership and its RELEX Solutions supply chain integration, both targeting the Pro market.

Both companies face the same core challenge right now. High mortgage rates have slowed home sales and pulled down demand for large renovation projects. But aging U.S. housing stock still requires ongoing maintenance and repair, so demand has a floor.

Here’s why understanding the differences between these two businesses matters so much for investors today.

Estimate a company’s fair value instantly (Free with TIKR) >>>

Home Depot Carries More Revenue, but Both Retailers Are Seeing Margins Compress

Home Depot’s revenue grew from $132.1B in fiscal 2020 to $164.7B in fiscal 2025, a gain of nearly 25%. But operating margins have been moving in the wrong direction. HD’s operating margin peaked at around 15.3% and has since fallen to around 12.7% today. Rising selling and administrative costs, tied partly to integrating SRS Distribution, have added pressure on profitability.

HD’s free cash flow has also come under pressure in recent periods. HD’s FCF peaked at $17.9B in fiscal 2023 and has since fallen to $12.6B in fiscal 2025. Acquiring SRS Distribution, a major building products distributor, drove up capital outflows and integration costs. Yet the Pro-driven growth strategy behind that deal still supports the long-term revenue thesis.

Lowe’s tells a different story on the revenue line. Sales peaked at around $97.1B and have since come down to $86.3B, tied to softer housing activity and weaker big-ticket spending. Operating margins at Lowe’s peaked at 13.5% but have also compressed, falling to 11.8% most recently. FCF remained relatively stable, however, finishing at $7.7B in fiscal 2025.

On a margin basis, Home Depot leads Lowe’s by around one full percentage point. But both businesses are dealing with the same headwinds, and the gap has been narrowing.

Lowe’s FCF conversion also remains efficient relative to its revenue base, despite its smaller scale. So the margin comparison between these two retailers is closer than the headline numbers suggest.

See what analysts think about HD and LOW stock right now (Free with TIKR) >>>

Home Depot Commands a Premium Multiple, but Lowe’s Is Trading Near the Low End of Its Range

Home Depot currently trades at around 21x forward earnings and around 14.8x forward EV/EBITDA. EV/EBITDA measures total company value relative to operating profits and helps compare businesses with different debt levels.

Both multiples sit well above Lowe’s current levels and reflect HD’s scale advantage with Pro customers. Investors have historically paid a premium for HD because its contractor relationships generate larger, more predictable orders.

Lowe’s trades at around 18x forward earnings and around 13x forward EV/EBITDA. Both multiples sit at the lower end of Lowe’s own historical range. For context, Lowe’s NTM P/E reached around 21x in early 2026 but has since compressed to around 18x. And that compression reflects the stock’s significant decline from its 52-week high.

Home Depot’s premium over Lowe’s amounts to around 3 turns on forward earnings and about 2 turns on EV/EBITDA. But those gaps have narrowed in recent months as HD’s own multiple has compressed from prior highs. HD’s NTM P/E reached around 25x in early 2026 and has since fallen to around 21x. So the market has been re-rating both retailers in light of softer housing demand.

Lowe’s also offers a slightly higher forward FCF yield at around 5.8%, versus HD at around 5.0%. And FCF yield measures how much free cash a company generates relative to its market value, so a higher yield means more value per dollar invested.

Home Depot currently yields around 3.0% on its dividend, and Lowe’s yields around 2.2% at today’s price. So income-focused investors may find HD’s dividend the more attractive option at current levels.

See analysts’ full growth forecasts and estimates for HD and LOW stock (It’s free) >>>

Both Return Models Point to Similar Upside Over the Next Three Years

We analyzed the upside potential for Home Depot stock based on its Pro-driven growth strategy and gradual margin recovery.

Based on estimates of around 4% annual revenue growth, around 13% operating margins, and a normalized P/E multiple of 21x, the model projects HD stock could rise from $315 to around $420 per share.

That would be a 33% total return and an 11% annualized return over the next 2.7 years.

We analyzed the upside potential for Lowe’s stock based on its ongoing Pro segment expansion and cost discipline.

Based on estimates of around 5% annual revenue growth, around 12% operating margins, and a normalized P/E multiple of around 18x, the model projects LOW stock could rise from $225 to around $296 per share.

That would be a 31.5% total return, and around 10.5% annualized over the next 2.7 years.

Based on analysts’ consensus estimates, we see both HD and LOW pointing to similar annual returns in the 10% to 11% range. But HD’s model depends more on margin recovery toward historical levels.

While Lowe’s model relies on slightly faster revenue growth at a lower multiple. Both outcomes are plausible, but the pace of the housing market recovery remains the key variable for each stock.

Build your own Valuation Model to value any stock (It’s free!) >>>

Which One Do You Actually Buy?

Home Depot is the clear scale leader in this comparison. And at $165B in annual revenue, it generates nearly twice what Lowe’s brings in. Its SRS Distribution acquisition also gives it a meaningful edge in serving professional contractors. And the Pro segment tends to carry higher order values, better predictability, and more reliable recurring spending.

Lowe’s is working through a period of operational transition. Revenue has come down from its peak, and margins have compressed, but Lowe’s still generates strong free cash flow. CEO Marvin Ellison cut 600 corporate jobs in early 2026 and has been sharpening the company’s Pro and digital capabilities. Those moves may take time to show up clearly in the financial results.

If the U.S. housing market stabilizes, both stocks stand to benefit from a recovery in renovation spending. Home Depot’s Pro ecosystem positions it to capture contractor-driven recovery spending first. Going forward, HD may appeal more to investors who prefer scale and dividend income. And Lowe’s may appeal to those who prefer a lower multiple and faster estimated growth over the near term.

See a stock’s true value in under 60 seconds (Free with TIKR) >>>

Should You Invest in Home Depot or Lowe’s?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up HD or LOW, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track HD or LOW alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

Analyze Home Depot and Lowe’s stock on TIKR Free→

Looking for New Opportunities?

• See what stocks billionaire investors are buying so you can follow the smart money.
• Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
• The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.

Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!