Home improvement trends have shifted dramatically with rapid urbanization, increased inclination towards energy-efficient living spaces, rising consumer spending, and permanent adoption of hybrid work models across numerous organizations.
The home improvement services market is expected to reach $585.30 billion by 2030, rising at a 6.2% CAGR from 2021-2030. Additionally, rising housing prices due to skyrocketing inflation have caused many people to opt for remodeling rather than buying a new house.
Independent retail giant Bed Bath & Beyond Inc. (BBBY) had a wild run over the past month due to the meme stock frenzy. However, the company is in financial turmoil. On August 31, the company announced 150 store closings, a series of layoffs, slashing of its internal brands, and $500 million in new loans to soar up its ailing finances. The stock has slumped 60.4% over the past six months.
Thus, we think fundamentally solid home improvement stocks, Lowe’s Companies, Inc. (LOW) and Haverty Furniture Companies, Inc. (HVT), could be better investments than BBBY.
Lowe’s Companies, Inc. (LOW)
LOW operates as a home improvement retailer in the United States and internationally. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating.
On September 8, LOW and Instacart, a leading grocery technology company in North America, announced the availability of same-day delivery from more than 1,700 Lowe’s stores nationwide. The company will be able to deliver nearly 30,000 items within an hour, freeing up customers’ time. Being one of the first retailers on the Instacart app to offer same-day delivery, this should prove to be strategically beneficial for LOW.
LOW’s operating income increased marginally to $4.23 billion in the fiscal quarter ended July 29, 2022. Net earnings for the quarter came in at $2.99 billion, while its EPS stood at $4.67, up 9.9% from its year-ago value.
Street expects LOW’s revenue for the fiscal quarter ending October 2022 to come in at $23.14 billion, indicating a marginal year-over-year increase. Its EPS is expected to improve 12.6% year-over-year to $3.07. The company beat the consensus EPS estimates in three of the trailing four quarters.
Over the past month, the stock has gained 5.4% to close the last trading session at $205.65.
LOW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
LOW is also rated B in Quality and Sentiment. Within the Home Improvement & Goods industry, it is ranked #15 of 62 stocks. To see additional POWR Ratings for Value, Momentum, Growth, and Stability for LOW, click here.
Haverty Furniture Companies, Inc. (HVT)
HVT is a specialty retailer of residential furniture and accessories, custom upholstery products, eclectic looks, and mattress product lines. The company also offers financing through a third-party finance company and an internal revolving charge credit plan.
HVT’s sales for the fiscal second quarter ended June 30, 2022, increased 1.3% year-over-year to $253.20 million. The company’s gross profit came in at $146.60 million, representing a 3.6% year-over-year improvement, while its EPS increased 5% year-over-year to $1.27.
The company surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Its EPS is expected to grow at a 13.1% rate per annum over the next five years.
The stock gained 3.2% intraday to close the last trading session at $27.16.
HVT’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has an A grade for Quality and a B for Value and Sentiment. HVT is ranked #7 in the same industry. Click here to see the additional ratings for HVT (Momentum, Stability, and Growth).
LOW shares were trading at $206.67 per share on Monday afternoon, up $1.02 (+0.50%). Year-to-date, LOW has declined -19.00%, versus a -13.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More…