Home Depot vs. Lowe’s: Which Stock Is the Better Buy Today?

On the Aug. 24, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discuss whether Home Depot HD or Lowe’s LOW stock is the better stock to buy today. Here is an excerpt from the show.

Home Depot Delivers Strong Results Despite Housing Headwinds

Susan Dziubinski: Pivoting over to some new research from Morningstar on companies that reported last week. We’ll start with two leading retailers in home improvement with Home Depot and Lowe’s. Start with Home Depot. The company’s results were pretty good despite a tough housing market. Morningstar maintained its $325 fair value estimate on the stock. What’d you think of the results?

David Sekera: Yeah, as they said, they were probably pretty good overall, but I think this is one where you differentiate between performance and valuation. From a top-line perspective, second quarter revenue up 5.7%. Pretty good growth. Of that, 1.7% came from same-store sales growth. The rest of it really came from some new acquisitions that they’re tucking into their overall business.

Now, the operating margin at 14.7% was down 10 basis points. Unfortunately, the benefit from tariff refunds wasn’t enough to more than offset some higher costs that they’re experiencing. The question here with the company is that it held its 2026 operating margin guidance flat. I think the real question with this company is what’s going to happen in 2027, whether those higher costs continue to pressure that operating margin or if they’re able to find ways to offset that and keep the operating margin flat or start to grow from here.

Taking a look at our own assumptions over the longer term, really nothing this quarter was enough to change our fair value estimate. From our perspective, nothing really to do here. But I did have kind of one note here as I read through the analyst write-up, which I thought was pretty interesting. Overall, she notes that the housing market remains pretty stalled at this point. But what she pointed out—and I didn’t realize this—over the past five years, the average monthly mortgage payment for the median US home has risen by $1,000. I didn’t realize it was actually that high. Half of that is coming from higher financing costs. When you think about how much that’s risen, yeah, that’s really pressured home improvement spending.

Lowe’s Maintains Long-Term Potential Amid Mixed Results

Dziubinski: All right. Now, meanwhile, the results from Lowe’s appeared to be a little bit more mixed than Home Depot’s results, at least on the surface. Walk through Morningstar’s take on Lowe’s results.

Sekera: Exactly. If you look at their second-quarter revenue, that came in a lot higher than what we saw at Home Depot. That’s up 8.0%. But of that 8.0%, only 0.2% came from same-store sales. I would really like to see better same-store sales growth as a mix of that overall revenue growth. Really, that just means that it’s a strength in a lot of their pro sales divisions, some of these new areas that they bought, some other acquisitions that they made that generated all of that growth.

Again, good to see growth. Personally, I’d like to see that growth a little bit more balanced. In this case, their operating margin contracted by 62 basis points, higher fuel costs, transportation costs, and so forth; a greater contraction than what we saw at Home Depot. They ended up lowering their guidance to the low end of their prior guidance range.

Now, we didn’t make any changes to our fair value at this point in time. Based on that and looking at what the market is pricing in, it seems like the market’s looking for 2% same-store sales growth on average over the longer term. Operating margins in an 11% to 12% area. We’re looking for better performance over the longer term. We’re forecasting 3% same-store sales growth, which, in my mind, when you think about just some volume increases and just inflation, I don’t think 3% same-store sales growth is really all that unreasonable. We’re looking for an operating margin of 13.7% over the longer term. Again, our forecasts here are a bit higher than what the market’s currently pricing into that stock.

Which Stock Is a Better Buy Today?

Dziubinski: All right. Morningstar’s fair value estimate on Lowe’s is $255. Given that, given the valuation on Home Depot, which would you say is the better stock to buy today, Dave? Home Depot or Lowe’s?

Sekera: When I take a look at these stock charts, I mean, both of them have generally been on a pretty downward trend over the past year, but I think it’s really for a couple of different reasons. Home Depot was one that we thought swung too far to the upside, had gotten over its skis just too much. We’re not necessarily surprised to see that one having traded down as much as it has. In fact, it’s still above our long-term fair value estimate, but at the top of that 3-star range. Lowe’s, on the other hand, is lower than where it was a year ago, but that one we think looks much more attractive. It’s at a 15% discount, which puts it right at that border between a 3- and 4-star-rated stock, currently a 4-star-rated stock. Not necessarily hugely cheap, but in our view, a much better buy than what Home Depot is today.

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