Lowe's Companies Inc

Valuation multiples help investors determine market values for comparable companies. For our analysis, we consider forward PE (price-to-earnings) multiples due to high visibility in Home Depot (HD) and Lowe’s Companies’ (LOW) earnings.

Across the five moat sources (network effect, intangible assets, cost advantage, switching costs, and efficient scale), efficient scale is the most likely to drive a “narrow moat” rating from Morningstar.

Home Depot (HD) posted SSSG of 6.3%, while its US stores posted SSSG of 6.6%. Its stores in Mexico and Canada also posted positive SSSG.

Lowe’s Companies (LOW) operates 2,129 home improvement and hardware stores in the United States, Canada, and Mexico.

Cabela’s peers have outperformed the company based on PBV. However, Cabela’s has outperformed its peers based on PE and PS.

Emerson Electric’s (EMR) omnichannel sales strategy is a multichannel approach that provides an integrated shopping experience.

Cabela’s (CAB) has been outperformed by its peers based on PBV (price-to-book value) ratio. However, Cabela’s has mostly outperformed its peers based on PE (price-to-earnings) and price-to-sales ratios.

The greatest opportunity for Lowe’s (LOW) perhaps lies in fully leveraging the omni-channel (XLY) model.

Lowe’s (LOW) is one of the largest and oldest big box retailers around. It’s been publicly listed since 1961.

Home Depot’s same-store sales grew 5.1% overall, marking the 18th straight quarter of positive comps for the retailer.

Home Depot’s (HD) stock has performed well over the past five years. In fact, it’s been the best-performing stock in its peer group.

Home Depot’s (HD) supply chain is getting more productive, resulting in better gross margins. Each store stocks about 30,000 to 40,000 different products.

Marketing initiatives at Home Depot include Pro Xtra. This program exclusively targets professional customers.

Home Depot invests considerable sums in providing a superior customer experience. Its co-founders say “the customer has a bill of rights at The Home Depot.”

Kitchen and garden products are the best-grossing product categories. These accounted for nearly 27% of revenues in fiscal 2014.

The home improvement industry is highly concentrated, particularly in the consumer market. The degree of concentration is growing.

Fiscal 2015 was a record year for Home Depot. The stock has returned over 47% over the past year and over 10% year-to-date.