There is more than just $50 billion that separates both Lowe’s and Home Depot stocks

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Lowe’s entire report followed the industry leader’s tendency of trailing behind. Sure, the home improvement behemoth outperformed management’s prior sales and profits forecasts for 2021, while gaining market share in key industry segments such as pro contractors. Lowe’s, on the other hand, has been unable to narrow the operating gap with its biggest competition, despite plans to surpass $100 billion in annual sales by 2022.

Lowe’s revenue increased by 5% for the quarter, representing a 35% increase from the previous year. As a result of its success, Lowe’s has increased its yearly revenues by about $28 billion, or 39%. However, Home Depot outperformed Lowe’s in this area, with sales up 8% for the quarter and 11% for the entire year of 2021.

In the last two years, the industry leader added $40 billion to its annual revenues, a 36% gain. The professional contractor segment, which both businesses have targeted as a crucial development channel, is more competitive. Lowe’s reported a 23% increase in professional sales in the fourth quarter. Home Depot didn’t give an exact amount but management noted on a conference call that big ticket purchases above $1,000, which are a decent proxy for professional sales, were up 18%.

Following two years of spectacular growth, both firms forecasted practically flat sales in 2022. That implies Lowe’s sales will be around $100 billion, approximately a third less than Home Depot’s $150 billion. However, the operating margin will rise, maybe to as much as 13% of revenues. Home Depot expects its margin to remain stable at around 15.2% of sales, implying that Lowe’s will reduce the financial gap with its competitor. The cash return patterns are another factor to consider for investors selecting between these two equities. Lowe’s focuses more on stock buybacks than Home Depot, which is combining stock repurchase expenditures with a rapidly expanding dividend. Home Depot has increased their dividend by 15% after increasing it by 10% last year.

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