Home Depot Vs Lowes

If you ask someone to name the leading home improvement retailer, they will most likely answer either Home Depot or Lowe’s. Home Depot and Lowe’s are both home improvement retail stores that operate in the service sector of business. Home Depot was founded in 1978 and Lowe’s in 1946 (Fernando, 2015). I have made a hypothesis that Home Depot will be the top home improvement company with Lowes being its biggest competition. Both companies Home Depot and Lowes operate in the United States, Canada, and Mexico. Home Depot has 2,269 stores, with 1,976 in the United States, 182 are in Canada, and 111 are in Mexico. Lowes has 1,840 stores, with 1,793 in the United States, 37 are in Canada, and 10 are in Mexico (Fernando, 2015). Both of these companies carry products that are used to build, make home improvement, repair, remodeling, and maintain the maintenance of a home. The Home Depot and Lowe’s have many stores all over the world that sell various building materials, home improvement products, and lawn and garden products. Both of these companies are pretty similar in the kind of services and products that they offer.

Home Depot and Lowe’s both have installation services, but they are quite different. The Home Depot provides installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me, and professional customers. The Home Depot also act as a contractor to provide installation services to its do-it-for-me customers through third-party installers. Whereas Lowe’s offers installation services through independent contractors in various product categories; extended protection plans; and in-warranty and out-of-warranty repair services (Yahoo Finance). They both have different Branding methods when it comes to their stores. The Home Depot uses a black and yellow color scheme throughout their stores and

BCA Research Project

it seems to be more customers such as builders or construction workers. Lowes stores have a blue and white color scheme and it seems to be a home improvement store that is easy to navigate through.

Home Depot’s stock is selling at $130.44 as of today. Lowe’s stock is selling at $75.01. Looking at these prices told me that Home Depot is more profitable because they are able to sell their stock $55.00 more than Lowes. I did a comparison on both companies using different ratios that would tell me each company’s liquidity, assets management, debt management, profitability, and market value ratios (Brigham & Houston, 2015). The results of my research are graphed below.

Viewing the current ratio for both companies over the last three years I would say that Home Depot is showing signs of strength and that the company is able to pay off its debts as they come due. Although Lowes current ratio is not extremely below the industry ratio I would however watch its current ratios in the future as it has been declining over the past three years.

BCA Research Project

Home Depot’s debt to equity ratio is too high for its creditors it shows that too much of the company’s capital is tied to his debtholders. As a result that Home Depot’s debt to equity ratio is higher than the industry average is not good. These numbers would make creditors reluctant about lending more money to Home Depot. It also puts the company at risk of bankruptcy if they borrow more money.

Lowe’s on the other hand started out with a high debt to Equity ratio in the past but has decreased its ratio and brought it below the industry average. It seems that Lowes has paid down a lot of its debt leaving the company open for growth.

BCA Research Project

Home Depot seem to be doing very well with getting its assets turnover its numbers are close to the industry average for inventory turnover which means that sells are up.

Lowes inventory turnover is much lower than the industry average which means that the company is holding too much inventory. This could be why Lowes current ratio is declining. Lowes needs to get its sells up by getting more customers in the door to sell it products and services.