HD/LOW: Mind The Sentiment

08/16/11 01:00PM EDT


 

Yeah yeah…we all know the differences in the comp spread and relative operating performance. The market knows that too. But LOW will not roll over and play dead. There’s no doubt it is having execution issues and is losing share to Depot as HD focuses heavily on its core. But HD was a year early (2009/10) in reaccelerating both store level capex and SG&A per square foot. Now it is benefitting. LOW’s uptick in investment spending over the past 12 months during a time of weakness in its business (and botched execution) has been particularly painful. Bigger picture, we like this space given the catch-up in deferred maintenance as the housing market continues to suffer. Would we buy either today? No. But the relative trajectory in revenue and margins is likely to turn in LOW’s favor over the next six months. On weakness, that’s where we’d look first.



HD/LOW: Mind The Sentiment - 8 16 2011 12 52 41 PM



HD/LOW: Mind The Sentiment - 8 16 2011 12 53 31 PM



HD/LOW: Mind The Sentiment - 8 16 2011 12 54 19 PM



HD/LOW: Mind The Sentiment - 8 16 2011 12 54 57 PM

 

<

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.