Essay about Lowe's vs. Home Depot Financial Comparison & Analysis

4338 Words Aug 24th, 2010 18 Pages
Home Depot & Lowe’s | Financial Comparison and Analysis | |

INTRODUCTION

Lowe’s (LOW) and Home Depot (HD) are competitors in the every growing market of Home Improvement. The following analysis of each company will examine the home improvement industry, the individual companies, their operating philosophies, their financial strengths or weaknesses, and a final conclusion on which company would be a better long-term investment.

INDUSTRY OVERVIEW

The growing trend of home improvement has perpetuated a larger demand for box store home improvement shops such as Home Depot and Lowe’s. There are several types of companies that contribute to the booming renovation industry. Home Depot and Lowe’s provide all the
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Home Depot provides for various contributions to charities. In 2002 Home Depot established The Home Depot Foundation to further the community building goals of The Home Depot by providing additional resources to assist nonprofit organizations throughout the United States and Canada. By partnering with the suppliers who fill The Home Depot’s shelves, the Foundation also strengthens relationships with these suppliers, the customers and the neighbors of their stores (corporate.homedepot.com, The Home Depot Foundation 2006). In addition to The Home Depot Foundation, charitable contributions are also made through Team Depot, disaster relief, community grants, corporate contributions, scholarships, and environmental awareness programs.

HOME DEPOT: FINANCIAL PERFORMANCE

Home Depot Financial Ratios | | Ended Feb 1, 2009 | Ended Feb 1, 2008 | Basic Earnings Per Share | $1.34 | $2.38 | Diluted Earnings Per Share | $1.34 | $2.37 | Asset Turnover Ratio | 1.68 times | 1.6 times | Receivables Turnover | N/A | N/A | Current Ratio | 1.2 to 1 | 1.15 to 1 | Quick Ratio | .13 to 1 | .14 to 1 | Times Interest Earned | 6.99 times | 10.41 times | Debt Ratio | 57% | 60% | Debt to Equity | 1.32 to 1 | 1.50 to 1 | Inventory Turnover | 4.22 | 4.18 | Inventory Turnover Days | 86.49 | 87.25 |

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