Home Depot vs. Lowe’s: Which Is the Better Buy Ahead of Q2 2025 Earnings?

Home Depot, Inc. (HD) and Lowe’s Companies Inc. dominate the US home improvement market. Both retailers are set to report Q2 earnings in August and are showing strong price momentum ahead of the earnings release. Seasonal demand likely boosted sales, but macro headwinds persist. This article provides a fundamental and technical analysis of Home Depot and Lowe’s to determine which offers the better investment opportunity.

Economic Signals Mixed Ahead of Q2 Earnings for Home Depot and Lowe’s

Housing Activity and Consumer Sentiment Remain Fragile

The chart below shows that the housing starts have increased 4.6% in June to an annualised 1.32 million units. This slight rebound follows a dip in May when housing starts dropped 9.7 % to 1.26 million units. This increase in housing starts signals modest support for demand in building materials and renovation. However, the broader slowdown in multifamily construction may limit gains for big-box retailers tied to home-building activity.

Moreover, the Conference Board Consumer Confidence Index has increased by 2.0 points to 97.2 in July. The overall confidence has stabilised since May, and it remains well below 2024 levels.

On the other hand, the Present Situation Index dipped to 131.5, which indicates some softening in how consumers view current conditions.

Meanwhile, the Expectations Index improved to 74.4, but remains below the key threshold of 80 for the sixth straight month. This is a level often associated with looming recession risk.

This mixed sentiment could lead to cautious spending behaviour. If consumers remain uncertain about future income and job prospects, they may delay discretionary purchases like home upgrades, potentially affecting Q2 performance for Home Depot and Lowe’s.

Rates, Inflation, and Tariffs Shape Spending Outlook

The chart below shows that the average 30‑year fixed mortgage rate slipped to 6.67 % as of August 8. This level is the lowest since April. The lower rates boost borrowing affordability and may spur refinancing activity.

However, the rates remain elevated above 6 % which continues to limit new home purchases. While refinancing might free up cash for DIY projects, continued rate pressure could slow significant spending on new homes and related retail sales.

The chart below shows the headline CPI was 2.7% in July, slightly below expectations. This eased fears of aggressive rate hikes and boosted investor sentiment. As a result, the S&P 500 hit a new high, lifting retail stocks including Home Depot and Lowe’s. Moreover, lower-than-expected inflation reduces borrowing costs, supporting housing activity and home improvement spending.

The US fiscal deficit has reached $1.6 trillion through July and may hit $1.95 trillion by September, as seen in the projection of the US deficit in the chart below. This widening gap could fuel longer-term inflation and lead to higher interest rates. For Home Depot and Lowe’s, that would mean pressure on mortgage affordability and credit-sensitive consumer segments.

Moreover, the sticky CPI indicators also point to underlying inflation that could weigh on discretionary spending.

The tariff-driven price pressures have remained muted so far due to delayed implementation. However, most tariffs take effect on August 8, and Trump’s temporary truce with China only postpones the impact. If companies begin passing on these costs, consumers may reduce large purchases. This could weigh on big-ticket sales at both retailers heading into Q3.

Home Depot Outperforms Lowe’s in Earnings and Revenue Growth

Home Depot delivered stronger earnings in Q1 2025. The company reported net earnings of $3.4 billion, or $3.45 per share, compared to Lowe’s $1.6 billion, or $2.92 per share. Despite a slight drop from last year’s EPS of $3.63, Home Depot still outperformed Lowe’s in profit and earnings per share. The difference reflects Home Depot’s stronger operating leverage and scale in the home improvement sector.

Moreover, Home Depot’s Q1 sales increased 9.4% year-over-year to $39.9 billion, while Lowe’s experienced a decline in sales from $21.4 billion to $20.9 billion, down 2.3%. Home Depot’s ability to grow despite macro headwinds signals better resilience and stronger demand across its larger retail footprint.

Home Depot’s US comparable sales grew 0.2%, while overall comparable sales declined 0.3%. On the other hand, Lowe’s posted a 1.7% decline in comparable sales. Lowe’s attributed this to unfavourable weather, but the broader gap suggests weaker customer traffic and slower execution relative to Home Depot.

For fiscal 2025, Home Depot expects total sales growth of 2.8%, with comparable sales up 1.0%. It plans to open 13 new stores and maintain a gross margin of 33.4%. However, Lowe’s projects flat to 1% comparable sales growth, and total revenue between $83.5B–$84.5B, with lower operating margins of 12.3%–12.4% versus Home Depot’s projected 13.0%.

The chart below shows the revenue estimates for the two fiscal years ahead. It is observed that the Home Depot’s revenue is climbing to $178.33 billion, nearly double Lowe’s estimate of $90.68 billion. While both companies have stabilised their footprints, Home Depot’s upward trend signals stronger market expectations and higher investor confidence heading into the rest of 2025.

Moreover, Home Depot’s quarterly net income was $3.433 billion, while Lowe’s lagged at $1.636 billion. The long-term chart highlights Home Depot’s consistent outperformance over time, with wider profit margins and less volatility. This financial strength makes Home Depot the better-positioned stock going into Q2 2025.

Home Depot and Lowe’s Boost Pro Services and Digital Growth

Home Depot continues to deepen its engagement with professional customers. It is acquiring GMS, Inc. (GMS) for approximately $5.5 billion, adding to the earlier $18 billion SRS purchase. This creates a network of over 1,200 locations and 8,000 delivery trucks dedicated to job-site deliveries. This move strengthens Home Depot’s logistics, inventory reach, and Pro-focused services. It also leverages a diversified supply chain that sources over 50% of products domestically, a strategy designed to sidestep inflation and tariff pressures.

Lowe’s is also pivoting toward the Pro market. It acquired Artisan Design Group (ADG) for $1.33 billion, adding $1.8 billion in revenue and an extensive installer network to its portfolio. Lowe’s total home strategy further targets Pro growth through loyalty programs, digital tools, and rural expansion.

Both retailers are investing heavily in digital and omnichannel platforms. Home Depot’s AI-driven “Magic Apron” and digital tools helped drive an increase in online comparable sales in Q1 2025. Lowe’s is building its “Total Home” digital ecosystem. It launched the first online marketplace in US home improvement, expanded its product range via third-party sellers, and continues to enhance omnichannel fulfilment and AI tools.

Home Depot Technical Outlook Shows Bullish Patterns Pointing to Further Gains

Uptrend Strengthened by Long-Term Support and Rebounds

The monthly chart for Home Depot shows strong bullish price action and suggests that prices are poised to move higher in the coming months and years. The stock has built a solid long-term base since the early 21st century and continues to rally within a parabolic uptrend.

The volatility that emerged after the bottom in August 2015 created a strong foundation for further gains. The major low in March 2020 at $123.94 triggered a powerful rally, pushing Home Depot to a record high of $384.79 in December 2021. A sharp correction from that level formed a significant bottom in September 2022 at $247.61, followed by another surge to a new all-time high of $431.63 in November 2024.

The price action remains bullish above the $400 level. The formation of an ascending broadening wedge pattern within the uptrend signals continued volatility within a bullish structure. This setup suggests both short-term and long-term investors could consider buying to capture further growth momentum in Home Depot.

Bullish Patterns Signal Potential for New Record Highs

The weekly chart for Home Depot also shows strong bullish price action above the long-term support line. The stock has formed a bottom each time it touched this level. The most recent instance was in 2023, when the price hit $262.61 and triggered a strong rally to a record high of $431.63. Based on the clear rounding bottom pattern above this red trend line, the price appears poised to surge and potentially reach new record highs in 2025.

This bullish price structure is also evident in the chart below, which shows a cup and handle bottom and a V-shaped recovery pattern. This setup reinforces the bullish outlook and signals strong upside potential for Home Depot’s price. The key support level remains at $315, and the stock is likely to continue moving higher from this level.

Lowe’s Poised for Breakout as Buy Signals Emerge

The technical outlook for Lowe’s is also strongly bullish, similar to Home Depot. The stock has shown sustained bullish price action over time. Price action in August 2025 suggests that the stock is ready to surge to new highs from current levels.

The chart below shows that the recent correction in Lowe’s stock during 2025 did not reach the primary support at $177.96, which represents the 38.20% Fibonacci retracement. Instead, the stock found support at the 23.6% Fibonacci retracement level and has continued to advance.

Based on this price structure, Lowe’s is likely to follow Home Depot’s bullish trajectory and continue moving higher.

The bullish price structure for Lowe’s is also evident on the weekly chart, which shows rounding bottom patterns above the $150 region. Each time the price corrects lower, it consolidates at the support level before initiating a new advance higher. A break above $280 would trigger the next move toward new record highs.

Risk Factors

High interest rates remain a significant headwind for Home Depot and Lowe’s. Although mortgage rates dipped slightly in August, they stayed above 6%, continuing to discourage new home purchases. The slower housing turnover reduces demand for home improvement, and both retailers may see weaker foot traffic if the housing market stays sluggish.

Moreover, the consumer sentiment also shows warning signs. The Expectations Index remains below the critical 80 mark, a level historically associated with recession risk. While inflation has eased slightly, it does not yet reflect the impact of tariffs. Additionally, sticky core prices continue to affect spending habits. If the job outlook weakens or prices rise again, consumers may delay home upgrades and large purchases.

Home Depot vs. Lowe’s — Which Is the Better Buy?

Home Depot stands out as the stronger stock at current levels. It delivered higher earnings, stronger revenue growth, and better operating margins in Q1 2025. Its investments in the Pro segment and logistics, along with robust digital sales, reinforce long-term strength. On the other hand, the technical analysis also shows consistent bullish momentum, with patterns pointing toward new record highs. The stock’s large market share, resilient fundamentals, and bullish setup make it more attractive for both short-term and long-term investors.

Lowe’s also shows promising upside, especially with its recent focus on the Pro market and digital expansion. However, its recent sales decline, lower operating margins, and smaller scale make it a slightly weaker pick. While the technical chart is bullish and suggests a breakout, Home Depot’s superior earnings performance and strategic positioning provide a stronger foundation in the current macro environment. For investors seeking stability and growth, Home Depot appears to be the better buy at this stage.

Home Depot’s stock price has found strong support at $300 and appears poised to move higher ahead of the earnings announcement. Investors may consider buying at current levels and adding to their positions if the stock pulls back toward deeper support levels after the Q2 2025 earnings.