The Home Improvement Industry Will Benefit From This Rebound: The Home Depot, Inc. (HD), Lowe’s Companies, Inc. (LOW)

The guidance for both companies for the year ahead is modest.he Home Depot, Inc. (NYSE:HD) expects revenue to grow 2%-3% on a comparable sales basis this year. Whereas Lowe’s expects a growth of 4% in sales and a 3.5% raise in comparable sales. The outlook looks slightly better for Lowe’s, but Home Depot enjoys certain advantages that make it a better choice for investors.

Most importantly, Home Depot’s same-store sales have grown consistently over the last 30 quarters, as they have an advantage of converting footfall into sales by offering customer convenience with their key store locations.

Moreover, Home Depot operates at a better margin of 10.26% compared to Lowe’s Companies, Inc. (NYSE:LOW) 7.26%, and utilizes its assets in a far better way, which is evident from its ROA of 24.15%, versus 6.33% of Lowe’s. Both these advantages are because of its scale of operations, which is almost 1.5 times that of Lowe’s. Furthermore, Home Depot has lead the way in making things easier for its customers by bundling products with services such as hiring professionals for DIFM projects.

Foolish final words

Both he Home Depot, Inc. (NYSE:HD) and Lowe’s Companies, Inc. (NYSE:LOW) have a positive outlook for the coming year and should benefit from the rebound in the housing industry. An investor can use either of the stocks to diversify his portfolio, but Home Depot is the better pick.

The article The Home Improvement Industry Will Benefit From This Rebound originally appeared on Fool.com and is written by prateek attalani.

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