ATLANTA, July 18, 2026, 14:10 EDT
- U.S. stock markets did not open Saturday; Home Depot finished Friday trading at $338.87.
- Lowe’s Companies, Inc. NYSE:LOW has a trailing price-to-earnings ratio of 17.6, compared to Home Depot’s 24.1.
- Permits for single-family homes dipped 2.4% in June; new-home sales data for June is expected Friday.
The Home Depot, Inc. NYSE:HD currently trades at a trailing price-to-earnings ratio 36% above that of Lowe’s Companies, Inc. NYSE:LOW. New housing data is making the justification for this premium less convincing.
Both retailers posted first-quarter comparable sales growth of 0.6%. Each projected fiscal 2026 comparable sales will range from flat to up 2%.
Home Depot reported a 0.4% increase in U.S. comparable sales. The overall result received a boost of roughly 55 basis points from currency movements. Simple subtraction implies constant-currency growth was nearly unchanged.
| Measure | Home Depot | Lowe’s |
|---|---|---|
| Friday close | $338.87 | $208.73 |
| Weekly change | -1.29% | -1.37% |
| Trailing P/E | 24.1 times | 17.6 times |
| First-quarter comparable sales | +0.6% | +0.6% |
| Fiscal 2026 comp outlook | 0% to +2% | 0% to +2% |
The valuation gap amounts to 6.4 turns. The investment thesis focuses on Home Depot’s Pro platform and opportunities for market-share gains.
Management has backing from some quarters. Pro comparable sales rose and outperformed DIY in the first quarter. Large discretionary projects continued to face headwinds.
Chief Executive Ted Decker struck a cautious tone on demand. “We’re not looking at a marked improvement in underlying demand,” he said in May. He attributed stronger second-half comparable sales to typical storm activity.
New government data increased expectations. Initial figures for June show single-family starts dropped 0.2% to an annual rate of 895,000. Permits decreased 2.4% to 871,000, the lowest level in 10 months.
Financing conditions also deteriorated. The average rate on a 30-year mortgage climbed to 6.55%, its highest in 11 months. Pending home sales dropped 5.4% in June.
Builders also showed caution. In July, the NAHB confidence index dropped to 34 from 36. The percentage lowering prices increased to 37%.
Any policy boost is likely to take time to materialise. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said it “will take time to filter through.” He anticipates residential investment will continue to pose a modest drag. Reuters
Home Depot outperformed slightly last week, posting a 1.29% drop versus a 1.37% fall for Lowe’s and a 1.55% decline for the S&P 500. The margin was modest.
The following test is on Friday, July 24. The Census Bureau is set to release June new-home sales data at 10 a.m. EDT. Home Depot’s Q2 results are expected on August 18.
Stronger sales data would back Home Depot’s premium. A disappointing report would increase focus on execution and growth in Pro market share.
Risks: A drop in mortgage rates could accelerate the return of major projects. Persistent contractor weakness may weigh on sales, margins, and the valuation premium.
