Nomura Securities on Retail/Home Improvement: The Comp Gap - HD vs. LOW
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Price: $335.61 +0.33%
Rating Summary:
28 Buy, 21 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
28 Buy, 21 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on Retail/Home Improvement: The Comp Gap
Analyst, Aram Rubinson, The market is well aware of the fact that the comp gap between Home Depot (NYSE: HD) and Lowe’s has been growing. The gap has been increasingly shifting towards ‘ticket’. On the surface, that is encouraging for Lowe's (NYSE: LOW) investors. The jury, however, is still out. After all, LOW has been driving ‘traffic’ with promotions like a 5% credit discount. The big question to consider is how LOW’s traffic’ will look once it laps the 5% card promo (Q2 ’12) and moves more appropriately towards EDLP (everyday low pricing). Our analysis says it may be wise to brace for a widening ‘traffic’ gap. GP Comps tell us that LOW's 'traffic' may have indeed been aided by increased promotion. Home Depot (Neutral, pt $55) is the better operator, in our view, and we would look to get more positive at better prices. Lowe’s (Buy, PT $37) offers strong value with a 10% FCF yield coupled with hard assets underlying."
Analyst, Aram Rubinson, The market is well aware of the fact that the comp gap between Home Depot (NYSE: HD) and Lowe’s has been growing. The gap has been increasingly shifting towards ‘ticket’. On the surface, that is encouraging for Lowe's (NYSE: LOW) investors. The jury, however, is still out. After all, LOW has been driving ‘traffic’ with promotions like a 5% credit discount. The big question to consider is how LOW’s traffic’ will look once it laps the 5% card promo (Q2 ’12) and moves more appropriately towards EDLP (everyday low pricing). Our analysis says it may be wise to brace for a widening ‘traffic’ gap. GP Comps tell us that LOW's 'traffic' may have indeed been aided by increased promotion. Home Depot (Neutral, pt $55) is the better operator, in our view, and we would look to get more positive at better prices. Lowe’s (Buy, PT $37) offers strong value with a 10% FCF yield coupled with hard assets underlying."
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