Which Home Improvement Stock Has Better Upside?
The Home Depot, Inc. HD and Lowe’s Companies, Inc. LOW remain the two titans of the U.S. home improvement retail sector, yet they are charting distinct paths in a market shaped by high interest rates, subdued housing turnover and selective consumer spending. Home Depot is leveraging its scale, supply-chain strength and Pro customer relationships to defend market share, while Lowe’s is executing a multi-year transformation aimed at expanding its Pro penetration, accelerating digital growth and diversifying product offerings.
In a sector where seasonality, macro conditions and innovation all play critical roles, the question is- which of these stocks offers the more compelling upside?
Home Depot presents a strong long-term investment option for those seeking stability in the home improvement sector. Despite macroeconomic uncertainty, the company continues to demonstrate resilience through strategic execution and its ability to serve both DIY customers and professional contractors.
A key growth driver is its expanding Pro segment. The acquisition of SRS Distribution adds complementary verticals such as roofing, landscaping and pool supply while bolstering Home Depot’s trade credit program, a crucial asset for attracting and retaining large-scale Pro clients. Management sees SRS as a catalyst for capturing a greater share in the fragmented Pro market.
Home Depot’s investment in technology is delivering strong results. Its interconnected retail model, which blends digital and in-store experiences, has improved delivery speed and customer engagement. AI-powered tools like Magic Apron, combined with ongoing employee training, are helping transform stores into intelligent service hubs.
On the supply-chain front, the company’s diversification strategy reduces the reliance on any single country, with more than half of purchases sourced domestically. This helps mitigate geopolitical and tariff risks. Over the long term, Home Depot is well-positioned to benefit from structural tailwinds such as an aging U.S. housing stock, high home equity levels and pent-up remodeling demand that can be unlocked once interest rates normalize.
However, there are challenges to watch. Rising costs are putting pressure on margins, and demand for big-ticket remodels, particularly in kitchens and bathrooms, remains soft due to high interest rates. Inventory levels have also increased, which can create efficiency concerns if demand slows further.
Lowe’s continues to build on its position as a leading home improvement retailer, with particular strength in its Pro customer segment. Pro sales rose in the mid-single digits in the first quarter of fiscal 2025, supported by the nationwide relaunch of the MyLowe’s Pro Rewards program and targeted assortment improvements aimed at contractors and tradespeople.
The acquisition of Artisan Design Group is set to expand Lowe’s presence in the professional market, giving it access to a fragmented $50 billion opportunity and positioning it to benefit from an estimated 18 million new homes needed in the U.S. by 2033.
Lowe’s is advancing multiple growth initiatives, including rural market expansion and the planned opening of five to 10 new stores in 2025. Under its Total Home strategy, the company is focusing on areas such as expanding Pro sales, accelerating online growth and enhancing customer experience with investments in mobile smart devices for associates, same-day delivery and omni-selling capabilities. These efforts are expected to help lift comparable sales by 1.5% in the second quarter.
Digital capabilities are other growth engines. Lowe’s delivered a 6% year-over-year increase in online sales in the first quarter, driven by both higher traffic and improved conversion. The launch of the first home improvement product marketplace in the United States, powered by Mirakl, is expanding assortment without adding inventory or fulfillment costs.
Strategic technology partnerships are introducing AI-driven search, personalized recommendations and VR-powered design visualization, all aimed at enhancing the customer journey. Operational efficiency initiatives are also paying off. Perpetual productivity improvement programs and supply-chain investments helped lift the gross margin by 19 basis points year over year.
However, softness in big-ticket DIY discretionary categories remains challenging. Comparable sales fell 1.7% in the first quarter, with transaction volumes down 3.8%, as elevated interest rates, affordability concerns and macroeconomic uncertainty led customers to delay major projects in kitchens, baths, flooring and decor. Management does not anticipate a near-term rebound in this segment, which remains an important contributor to total revenue. Around 20% of Lowe’s purchase volume still comes from China, creating tariff exposure that can pressure margins in the second half of fiscal 2025.
link
:max_bytes(150000):strip_icc()/Architecture-TheDrawingBoardInc.InteriorDesign-FarnadyInteriorsphotobyStacyZarinGoldberg-a56604d79cf940c8906801c121a36a2c.jpg "5 Renovation Trends You’ll See in Every Home in 2026")
