Yahoo Finance·2025-12-22 16:41Industry Overview - The home improvement sector has faced challenges in 2025 due to high interest rates and a sluggish housing market, leading to reduced consumer spending on renovations and DIY projects [2] - Analysts anticipate only modest improvements in affordability and turnover as the Federal Reserve begins cutting rates, but mortgage rates remain high and existing-home sales are weak [3] Company Analysis: Home Depot - Home Depot is the industry leader with approximately 2,300 stores, focusing heavily on professional contractors, but has struggled to achieve significant growth in 2025 [4] - The company's third-quarter comparable sales growth was only 0.2%, with U.S. comparable sales increasing by just 0.1%, reflecting cautious consumer behavior amid economic uncertainty [4] - Home Depot expects adjusted earnings per share to decline by about 5% for fiscal 2025, a revision from the earlier forecast of a 3% drop [5] - The stock trades at a forward price-to-earnings ratio of around 23 times, indicating a premium valuation but limiting near-term upside potential, with analysts projecting only 2.4% long-term earnings growth [6] - Home Depot's strengths include its unmatched scale, a strong pro-contractor business, and recent acquisitions like SRS Distribution, which enhance its position in the professional market [7] Company Analysis: Lowe's - Lowe's stock has declined only 2.6% year-to-date, compared to Home Depot's 11% drop, and trades at a forward P/E ratio below 19 times [8] - Lowe's has consistently beaten earnings expectations over the last four quarters and has maintained its status as a Dividend King with 63 consecutive years of dividend increases [8]