Home improvement stocks were in focus this week. And for investors that means it's time to look at the earnings reports from Lowe's Corp. (NYSE: LOW) and Home Depot (NYSE: HD). These two companies make up what is widely considered to be a duopoly in this sector.
It's a difficult time to be in a sector that's adjacent to the housing market. Macro crosswinds are stiff as consumers remain anxious about spending; mortgage rates remain elevated, and housing turnover is at multi-year lows.
Four years ago, these companies benefited from a surge in DIY projects big and small. It's a different story now, with both companies having to demonstrate an ability to deliver operational execution, margin discipline, and the ability to connect with a changing consumer.
Neither of these home improvement stocks is going to appeal to growth investors. But if you're looking to blend stability and yield with capital appreciation in a volatile environment, this decision is about competitive edge and cycle resilience.
Why the Duopoly is Important
Home Depot and Lowe’s dominate the U.S. home improvement sector, capturing the lion's share of a market environment linked to cyclical housing trends and consumer discretionary spend. Their duopoly affords both pricing power, supply chain scale, and brand stickiness.
This combination limits new competitive threats and provides a reliable anchor for sector-focused portfolios. However, when one stumbles, the other rarely surges. This makes relative performance analysis essential for those seeking outperformance at the right price point.
Home Depot Delivered a Poor Report
Home Depot posted $41.4 billion in fiscal Q3 2025 revenue, up 2.8% year-over-year, but the bulk came from its recent GMS acquisition, masking broader stagnation in core same-store sales, which ticked up a meager 0.2%.
U.S. comps were flat at 0.1%, while adjusted diluted EPS slid to $3.74, missing consensus for the third straight quarter. Management attributed the miss and downward guide revision to weaker-than-hoped demand, noting that the absence of typical seasonal storm activity dampened sales in high-margin repair categories.
Economic uncertainty and a sluggish housing market have led homeowners to defer expensive renovations, weighing on growth. The profit outlook was cut: adjusted EPS for the year is now forecast to decline roughly 5%, and even with incremental sales from acquisitions, Home Depot expects only modest top-line gains.
CEO Ted Decker noted execution was solid, market share likely expanded, but headwinds from muted consumer spending, lack of storms, and continued housing malaise remain front and center.
Lowe’s Results – Gaining Traction with The PRO Consumer
Lowe’s reported a mixed quarter as well, with a deeper drop in comp sales, but there were signs of resilience beneath the data. The company's same-store sales declined 1.7%, having taken a bigger hit from weather-driven category softness, especially in outdoor and seasonal lines.
Top-line revenue lagged Home Depot, and operating margins softened, but the pivot toward the Pro customer base and digital infrastructure investments showed some traction. However, for perspective, Lowe's is the smaller of the two home improvement stocks, with annual revenues less than half of Home Depot's.
Management highlighted ongoing improvements in execution, stock repurchases, and cost controls that supported its bottom line. While subscriber numbers for installation and pro-services are scaling up, Lowe's remains more cyclical—and more sensitive to swings in housing momentum.
Strategic investments in omnichannel and footprint rationalization could pay off, but for now, the wider margin gap and weaker traffic underscore ongoing challenges relative to its larger peer.
Which of These Home Improvement Stocks is the Better Buy?
Lowe's trades at a discount and offers bullish long-term prospects, but the asymmetric trade in the current climate leans toward Home Depot. Its scale, operational leverage, and margin stability give it the edge when cyclical headwinds loom. However, you should watch for a relative reversal if housing rebounds sharply in 2026.
What Could Go Wrong?
A deeper housing downturn or a surprise spike in unemployment would pressure both stocks, further reducing DIY and professional spending. Continued macro volatility or execution missteps, especially on inventory and expense management, could also erode their duopoly advantages, leaving investors exposed to both cyclical risk and narrowing operational spreads.
Conclusion
While neither stock is risk-free, Home Depot currently combines the defensive attributes investors prize with enough resilience to weather ongoing uncertainty. Lowe's remains a value story worth monitoring, but Home Depot's stronger margins and steadier comps make it the better buy for now.
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