Value Line Publishing

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Value Line Publishing
There are two leaders for retail building-supply industry: Home Depot and Lowe’s, the two companies captured more than third of the total sale of the industry. Home Depot hold 22.9% market shares of the industry and Lowe’s hold 10.8% market share. Two companies are head to head competitor but focus on different market, Home Depot focused on large metropolitan areas and Lowe’s focused on rural area. Two companies both maintained online stores. Lowe’s has its own Web site: “Accent & Style” and focused on professional customer. Home Depot developed new type of retail stores in urban area and provide products and services in a compact format. Home Depot developed its first international retailer in 1994 and 10% of Home Depot international stores were built in global area at the end of 2001. Home Depot has 1,333 stores and 256,300 employees in 2001 and Lowe’s has 744 stores and 108,317 employees in the same period time. Return on equity shows how well a company uses investment funds to generate earnings growth. Generally a return on equity between 15% and 20% are considered desirable. Home Depot’s five year returns on equity all between 15% and 20% and Lowe’s five year returns on equity mostly less than 15%. The data prove Home Depot got higher net earnings than Lowe’s. Gross margin can use to determine the value of increasing sales. The higher gross margin means the company does a better job on turning material into the income. Gross margin can guide the pricing decision and retailers can calculate profit by using the gross margin. Gross margin show that Home Depot had more profit and less cost than Lowe’s. The purpose of operating margin is to measure levels and rates of profitability. The most common way for a company to decide the success or failure is to analysis the net profits of the business. A higher operating margin is indispensable for a company to pay for its fixed costs, such as interest on debt. Operating margin show that Home Depot got better return on sales than Lowe’s. The higher working capital turnover is better because it means that the company is generating a lot of sales and the higher efficient utilization of assets. Home Depot has stronger sales than Lowe’s. The inventory turnover measures how quickly you are moving inventory through your warehouse. The Sales numbers of Home Depot are stronger than Lowe’s, but Lowe’s sales increased rapidly, | | Comparison Sales per store($ million) | |

| | 1997 | 1998 | 1999 | 2000 | 2001 |
Home Depot | 38.7 | 39.7 | 41.3 | 40.3 | 40.2 |
Lowe's | | 21.3 | 23.5 | 27.6 | 28.9 | 29.7 |
Home Depot/Lowe's | 182% | 169% | 150% | 139% | 135% |
Comparison sales per store of Lowe are increased much faster than Home Depot and predict average growth rate, comparison sales per store of Lowe will exceed Home Depot base on the current development situation. | | Comparison Sales per transaction ($) | |

| | 1997 | 1998 | 1999 | 2000 | 2001 |
Home Depot | 43.9 | 45.4 | 48.2 | 48.8 | 49.1 |
Lowe's | | 43.9 | 45.7 | 53.2 | 54.9 | 56 |
Home Depot/Lowe's | 100% | 99% | 91% | 89% | 88% |
Comparison sales per transaction of Lowe’s are larger than Home Depot, the increasing speed for comparison sales per transaction of Lowe’s is much faster than Home Depot and continued year by year. Comparing and analysis all the data, the Home Depot have better developing situation than Lowe’s from 2007 to 2001, Home Depot use funds and assets much more reasonable and efficiency than Lowe’s, Home Depot earning more profit than Lowe’s in five years period time. The numbers of sales are stronger than Lowe’s. Comparison sales per transaction of Lowe’s and comparison sales per store of Lowe were increasing more rapidly than Home Depot, and Lowe’s had larger debt than Home Depot. Value Line Publishing is in the business of producing financial forecasts to aid individuals and institutions in the analysis of potential investments. The nature of forecasting the future state of...
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