Home Depot vs. Lowe's: Which Home Improvement Stock to Bet on in 2026?

The Home Depot, Inc. HD and Lowe’s Companies, Inc. LOW are key players in the home improvement retail sector, serving both do-it-yourself (DIY) customers and professional contractors. Home Depot, with a market capitalization of around $355 billion, is the leading retailer focused on meeting home renovation, maintenance and construction needs. It operates more than 2,300 retail stores across the United States, Canada and Mexico, supported by a robust supply chain.In contrast, Lowe’s has a market capitalization of about $139 billion and operates more than 1,700 stores, primarily in the United States. Lowe’s has firmed its position by prioritizing merchandising discipline and store productivity, and focusing on a “total home” strategy to attract both DIY homeowners and professional customers. The company is driving higher engagement through loyalty programs and AI-enabled. Both companies are navigating a home improvement market marked by cautious consumer spending and slower housing turnover. While Home Depot benefits from its extensive scale, deeper pro penetration and supply-chain leverage, Lowe’s offers a more agile model with room for operational and market-share gains. For investors evaluating stability versus growth potential, the key question remains: Does Home Depot’s dominance make it the safer bet, or does Lowe’s focused strategy offer a more compelling investment opportunity in 2026?The Case for Home DepotHome Depot’s long-term growth strategy is increasingly shaped by its expanding Pro ecosystem, strengthened through the additions of SRS and GMS. These platforms give the company a deeper reach into specialty building materials and create natural cross-sell pathways between retail and wholesale channels. As SRS demonstrates resilience in challenging categories and GMS broadens access to drywall, ceilings and framing products, the combined network serves as a powerful engine for market-share gains with contractors who prefer a fully integrated supplier.The company is also enhancing its focus on professional contractors by introducing a new AI-powered tool designed to reshape how Pro customers plan and execute complex projects. The company highlighted that its blueprint takeoffs tool utilizes advanced AI and proprietary algorithms to analyze construction plans and generate material estimates with far greater speed and accuracy than traditional methods. This technology replaces the labor-intensive process that earlier took Pro customers weeks to complete. By incorporating this advanced technology, Home Depot is reinforcing its position as the go-to destination for all project requirements, from initial planning to material delivery. This development marks a significant step forward in catering to the Pro category. This progress allows Home Depot to differentiate its Pro offerings not only through product assortment but also through digital infrastructure. Exclusive brands, curated assortments and elevated seasonal offerings reinforce customer loyalty while maintaining the company’s competitive edge in categories where product leadership and brand preference matter.However, recent trends indicate that the company is facing structural headwinds, weaker demand visibility and margin pressure. The softness in housing turnover, a key driver of repair-and-remodel spending, remains a notable drag. With management citing housing activity at nearly 40-year lows and consumer behavior still pressured by affordability constraints, the company delivered a modest 0.2% increase in comparable sales in the third quarter, with U.S. comps up only 0.1%, sharply down from 1% and 1.4% increases, respectively, in the preceding quarter. Home Depot acknowledged that a lack of storms significantly impacted categories such as roofing, power generation and plywood in the third quarter. Additionally, the slight increase in the average ticket of 1.8% was offset by a 1.6% decrease in customer transactions, indicating a loss of traffic that the business has yet to address. Moreover, the high-value Pro customer segment is showing signs of weakness, with management noting reduced backlogs for larger projects, suggesting capital constraints or lower confidence among professional builders.The Case for Lowe’sLowe’s is another formidable player in the home improvement sector, supported by a "Total Home Strategy" that addresses the diverse needs of both professional contractors and do-it-yourself homeowners. By combining specialized services with a robust digital infrastructure, LOW has redefined itself as not merely a retail destination but a comprehensive solution provider.A key aspect of this strategy is the expansion into the high-value Professional market, which was recently accelerated by the acquisition of Foundation Building Materials (FBM). This buyout has expanded Lowe's product portfolio in interior building materials and enhanced its distribution capabilities, particularly in dense urban markets where the brand has a smaller presence historically. By integrating supplier systems into its sales interface, Lowe’s enables its associates to offer an "extended aisle" of specialized inventory for large-scale professional projects.Technological innovation, specifically the adoption of artificial intelligence, is a significant competitive advantage for Lowe’s. Through advanced virtual assistants, the company has simplified complex project planning for consumers and provided store associates with real-time expertise, resulting in customer satisfaction and conversion. Furthermore, AI in demand planning and inventory management has enabled more efficient resource allocation, ensuring that the right products are available to meet shifting consumer demands without the burden of excessive inventory.Lowe’s focus on high-growth categories, such as major appliances, home services and exclusive private brands, further solidifies its position. Lowe’s has developed a unique "market delivery network" that provides installation capabilities in virtually every domestic zip code. With record levels of home equity encouraging homeowners to invest in their current properties rather than relocate, Lowe’s is uniquely positioned to benefit from the "lock-in effect" within the housing market.Backed by prudent capital allocation and a strong focus on efficiency, Lowe’s demonstrates the discipline and strategic clarity needed to deliver steady long-term returns. However, still higher interest rates, cautious homeowners and slower housing turnover continue to pressure demand for large, discretionary home improvement projects, making it difficult for the company to generate strong volume growth.HD vs. LOW: How Do Estimates Stack Up?The Zacks Consensus Estimate for Home Depot’s current fiscal year projects a 3.2% increase in sales but a 4.5% decline in EPS compared to last year's results. For the next fiscal year, the consensus estimate indicates a 4.4% rise in sales and 4.3% growth in earnings. The consensus estimate for EPS for the current and next fiscal year has fallen by 41 cents and $1.01 to $14.55 and $15.18, respectively, over the past 30 days.  Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Lowe’s current financial-year sales and EPS implies growth of 2.9% and 2.2%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates an 8.7% rise in sales and 6.2% growth in earnings. The consensus estimate for EPS for the current and next fiscal year has fallen by 3 cents and 19 cents to $12.26 and $13.01, respectively, over the past 30 days.  Image Source: Zacks Investment ResearchHD vs. LOW: A Look at Past Six-Month Stock PerformanceHome Depot shares have edged up 2.8% over the past six months, trailing Lowe’s, which has surged 17.6% over the same period. Image Source: Zacks Investment ResearchHD vs. LOW: Stock ValuationHome Depot is trading at a forward 12-month price-to-earnings (P/E) ratio of 23.63, below its one-year median of 24.01. Meanwhile, Lowe’s forward P/E ratio stands at 19.19, above its median of 18.63. Image Source: Zacks Investment ResearchHD vs. LOW: Which Is a Better Bet for 2026?Lowe’s emerges as the more compelling choice for investors heading into 2026. While Home Depot retains unmatched scale, brand strength and a deeply entrenched Pro ecosystem, its near-term outlook is constrained by structural headwinds in the housing market. In contrast, Lowe’s is benefiting from sharper execution, improving operational efficiency, and a strategy that is gaining traction across both professional and DIY segments. Its focus on agility, technology-driven productivity and targeted market-share gains positions it better to navigate a sluggish housing backdrop while still delivering incremental upside. While Lowe’s carries a Zacks Rank #3 (Hold), Home Depot has a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Naming Top 10 Stocks for 2026Want to be tipped off early to our 10 top picks for the entirety of 2026? 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