HD/LOW: HD a high-quality EPS compounder
Strong Q2 comp performance at HD/LOW provided further evidence of the positive sector momentum. While housing concerns remain, we believe the backdrop is still supportive, given the persistent housing supply-demand imbalance. This is supporting mid-single-digit house price appreciation, the most important driver of home improvement spend. We expect HD to continue to capitalise on this momentum, while we see its recent investments, in stores and its supply chain, being greater comp drivers next year. Although sentiment has turned more positive on LOW, visibility is limited ahead of the December analyst day, while we also see risk that margin expectations may need to be reset. With LOW trading close to recent peaks, we remain Neutral.The Home Depot is a home improvement retailer. The company provides its customers an assortment of building materials, home improvement products, lawn and garden products, and decor products and provides a number of services, including home improvement installation services and tool and equipment rental. The company also maintains a network of distribution and fulfillment centers, as well as a number of e-commerce websites. The company provides a number of programs for its Professional Customers to meet their particular needs, and for its Do-It-Yourself and Do-It-For-Me customers, the company provides a number of installation services. The company also provides tool and equipment rentals for its customers.
Lowe's Companies is a home improvement retailer. The company provides home improvement products in lumber and building materials, appliances, seasonal and outdoor living, tools and hardware, fashion fixtures, rough plumbing and electrical, paint, millwork, lawn and garden, flooring, and kitchens categories. The company provides installation services through independent contractors in product categories, including appliances, flooring, kitchens, lumber and building materials, and millwork. The company also provides extended protection plans for various products within the appliances, kitchens, fashion fixtures, millwork, rough plumbing and electrical, seasonal and outdoor living, and tools and hardware categories.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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