Home Depot’s valuation multiple

The strengthening broader equity market in 2019 has increased Home Depot’s (HD) stock price, which has raised its valuation multiple. As of March 6, Home Depot was trading at a forward PE multiple of 18.1x, compared to 16.8x at the beginning of 2019.

Also, Home Depot was trading at 18.3 times analysts’ 2019 EPS estimates of $10.10, and 16.7 times analysts’ 2020 EPS estimate of $11.05. Its EPS are expected to rise 2.2% in 2019 and 9.3% in 2020.

Home Depot versus Lowe’s: Who Wins in Terms of Valuation?

Lowe’s valuation multiple

The optimism surrounding management’s guidance for 2019 and a new share repurchase program of $10 billion appear to have increased Lowe’s Companies’ (LOW) stock price and valuation multiple. As of March 6, Lowe’s was trading at a forward PE multiple of 16.7x, compared to 15.5x at the beginning of 2019.

Also, Lowe’s was trading at 16.9 times analysts’ 2019 EPS estimate of $6.06 and 14.6x times analysts’ EPS estimate of $6.99, with its EPS expected to rise 18.8% in 2019 and 15.4% in 2020.

Analysts’ recommendations

Of the 33 analysts who cover Home Depot, 66.7% have given the stock “buy” ratings while the remaining 33.3% favor a “hold.” None of the analysts have a “sell” rating. Analysts’ average 12-month price target stands at $203.11, which implies an upside potential of 10.1% from its stock price of $184.45 on March 6.

Of the 31 analysts who follow Lowe’s, 67.7% have given the stock a “buy” rating while the remaining 32.3% favor a “hold.” On average, analysts’ 12-month target price stands at $116.82, which implies a return potential of 14.1% from its stock price of $102.34 on March 6.

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