Home Depot Executive Summary

From 2007 to date, Frank Blake took over the management of the company. His era has seen tremendous expansion and diversification in the range of products. By the end of 2012, Home Depot had revenue of $70.395 billion. At the same time, the company had a net income of $3.883billion with an operating income of $6.661 billion. The company has a diverse workforce in its 2,248 locations. The stores are in the United States, China, Mexico, Puerto Rico, and Canada. The company retails in

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.

While Lowes has a smaller debt-to-asset ratio (~.64 compared to Home Depot’s ~.69) and a smaller debt-to-equity ratio (~1.76 compared to Home Depot’s ~2.24), the future liquidity and solvency of the company could come into question due to Lowes’s low current ratio, which has consistently trended downward, dropping from ~1.28 to ~1.16, over the past three years.

Home Depot compiles advertising, antitrust and confidentiality in policy of Compliance with Laws, Regulations, Policies, and Standard Operating Procedures. Advertising is to be provided to consumers with accurate, fair, and lawful information that is intended to help them make informed decisions. Antitrust laws in the United States and other countries are intended to preserve a free and competitive market place. Confidentiality is extremely important, as internal information is not to be shared with any outside venders, competition, or family members. This is to provide a guide for employees’, as Home Depot seeks competitive advantage. (Home Depot Internal, 2008)

Lowe’s is continuously being threatened by Home Depot in losing market shares. It is a constant battle; Lowe’s and Home Depot are expanding substantially in attempts to take over territory claimed by the other as well as unclaimed territory. The biggest weakness for Lowe’s is its lack of customer service. Customers are leaving Lowe’s in search of credible, knowledgeable service which is found at Home Depot.

This ratio is similar to ROA except that it shows only the return on the resource contributed by the shareholders. Home Depot maintained steady ratio the last two years while Lowe’s has been decreasing over the past three years.

Profitability and liquidity ratios are impressive and continue to reflect the company’s ability to succeed and compete with archrival and industry powerhouse Home Depot. The stock market ratios have fluctuated throughout the period analyzed, largely due in part to world events beyond management’s scope of control and the American public’s uncertainty in the market as a whole. All in all Lowe’s is forecasted to continue its growth and upward trend in all indicative areas and remain a power in the retail hardware, special orders and home improvement market, trespassing on territory once clearly dominated by Home Depot, the worlds largest hardware retailer. Lowe’s is a favorite amongst institutional investors as their holdings make up 80.80% of common stock issued.

The Home Depot (NYSE: HD) is a home improvement, construction products and services retailer operating over 2,000 big-box stores in the United States and abroad. The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank with the vision of one-stop shopping for do-it-yourself (DIY) customers, installation services for do-it-for-me (DIFM) customers and competitive products for the professional market. Their DIFM installation programs include products such as carpeting, flooring, cabinets, countertops, and water heaters. In addition, the company provides installation of various professional products like generators and HVAC systems.

Lowes current Trailing Twelve Month (TTM) P/E ratio is 23.63 (Nov 4) which is slightly above average. Home Depot has a P/E of 22.87 and the industry average is 23.46. Going back to Financial Year 2013 the P/E ratio for Lowes was 21.5, Home Depot was 20.3 and the industry average was 21.5.

$66.2 billion and $47.2 billion, respectively, which means Home Depot's returns were approximately $5.3 billion

There are a number of stakeholders for Home Depot. The list of internal stakeholders includes the Board of Directors, the senior management team, the shareholders and the employees. All of these stakeholders have a direct stake in the success of the company, especially in terms of finances and their livelihoods. All draw some form of income from the company, though with the shareholders that mostly comes in the form of capital gains. The external shareholders include the customers, the suppliers, the business partners, the governments and people living where Home Depot operates and the environment. There may also be unions or activist groups that feel (rightly or wrongly) that they have a stake in Home Depot's operations. For example, Home Depot pays taxes to the municipalities, states and countries in which it operates. It buys goods from its suppliers, many of which are dependent on Home Depot's business. Customers are natural stakeholders, since they buy goods from Home Depot. The people in the communities in which Home Depot operates benefit not only from the taxes, but charitable ventures, the jobs the company creates and the way that a Home Depot store transforms the local environment, landscape and business climate.

Home depot aimed to target professional customers by developing an exclusive Pro Xtra Loyalty program (The Home Depot, 2015). This program allowed the members to have access to exclusive product offerings along with product discounts and the ability to track their purchases and receipts online. Citibank co-branded Home Depot’s credit card which led to credit card purchases accounting for 23% of total sales by the end of the 2014 fiscal year. Black Friday events have shown increased customer traffic and accounted for the highest daily

Our direct competitors would be H&R Block and Jackson Hewitt, respectively. H&R Block has a professional atmosphere and gives off an ambiance that they are knowledgeable and capable. They have educated employees and trained professionals there to assure customers that everything will go well. Jackson Hewitt has a more casual and “home style” approach that allows it to be more welcoming and less

Home Depot's online presence has been alarming in previous year. Their online sales grew by 25.4% to attain $4.7 billion in FY2016 over the prior year. They have reported a lasting development in its earnings over the last five-year period. Home Depot’s total earnings grew at 5.9% during 2012-2016. In addition, it reported 17 quarters in a row of positive similar store sales for the Canadian business and 49 quarters in

My first choice for a company that would succeed today with globalization is Lowes Home Improvement. My main reason for this company is because what it supplies is needed anywhere in the world. Lowes not only supplies major appliances such as stoves and microwave but also offers installation on these items. They offer many home improvement needs such as windows, doors, siding, and all types of wood to build with. No matter where you go, these items are needed for your homes and businesses. This allows Lowes to be profitable in any market. It creates jobs, which helps local economies. It also brings other companies to these other countries. Companies such as General Electric and Anderson windows can become global companies with them.