Keep hammering away.
"We believe HD and LOW are the best retailers in our group, based on above-average demand growth, and a generally tame competitive environment," wrote analysts Seth Segman and Kieran McGrath in the note.
Home Depot reports second-quarter earnings before the bell on Tuesday, Aug. 15, while Lowe's details its own on Aug. 23.
Compared with first quarter results for both companies, the analysts wrote that they expect better second quarter figures. "We model HD US comps [growth] of 5.5% with some indicators pointing to 6%+, while for Lowe's we are modeling comps of 3.5%"
While Credit Suisse's team believes that Home Depot will outperform Lowe's, it will at a lesser rate than in previous quarters.
Lowe's trades at a more than four times discount compared with Home Depot, which could offer an attractive opportunity to the former, the analysts wrote.
The analysts added that they'd like to see modest upside to Home Depot, in line with Lowe's "with support from big-ticket trends, ideally some improvement in small ticket also, progress on key strategic initiatives (i.e. Pro, integration of acquisitions) and better visibility on gross margins."
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