Home Depot Has 10% More To Rise, Will Outperform Lowe's

Since I first presented my bullish article on Home Depot (HD), the stock has soared by 25.9% - more or less in-line with the return from Lowe's (LOW). Although much of the value gap has since been closed, I continue to expect the firm to outperform its competitor. This is a sentiment shared by the Street which rates Home Depot a "buy" versus a "hold" for Lowe's.

From a multiples perspective, Lowe's is the cheaper of the two. It trades at a respective 19.7x and 15.2x past and forward earnings while Home Depot trades at a respective 19.5x and 16.5x past and forward earnings. With that said, Lowe's is trading 148% above its 5-year average PE ratio versus only 123% for Home Depot.

At the third quarter earnings call, Home Depot's CEO, Frank Blake, noted strong geographical performance:

Sales for the third quarter were $17.3 billion, up 4.4% from last