HD/LOW: Upgrading HD, downgrading LOW
We view the housing backdrop as attractive and see the current sector momentum continuing. We therefore expect best-in-class operator HD to disproportionately capitalise on these trends. We see HD as a consistent earnings compounder and expect the company to exceed expectations, delivering a ~12% 3-yr EPS CAGR. We expect this outlook to be reinforced at the December 6th investor day and upgrade the stock to Overweight. Despite LOW's Q3 beat, we still see evidence of issues within the company's core operations. With the company not executing to warrant a higher multiple, and with limited visibility as to when trends will eventually improve we are downgrading to 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.
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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