Home Depot and Lowe's are about to report quarterly earnings, and Bank of America Securities thinks the two home-improvement giants may be heading in different directions. In a preview note, the bank said Home Depot's contractor-heavy customer base looks steadier than Lowe's, even as both chains lean on promotions and grapple with tariff-related costs.
The key signal comes from aggregated Bank of America credit and debit card data. The bank uses spending on "housing-related services" as a proxy for professional contractors—the electricians, plumbers, and remodelers who buy in bulk and drive a disproportionate share of revenue at these chains. That spending grew 5.5% in the second quarter, up from 4% in the prior quarter. By contrast, spending on home-improvement goods—the do-it-yourself (DIY) segment—improved only modestly, to 0.5% from negative 0.9%.
Why contractors matter
Home Depot has long positioned itself as the go-to destination for professionals, while Lowe's has a stronger DIY following. Contractors tend to be more loyal, buy in larger volumes, and are less likely to delay projects over small price increases. That makes them a more stable revenue base during uncertain economic times.
The BofA data suggests that professional demand is holding up better than DIY demand. That's a meaningful distinction because DIY spending is often more discretionary—homeowners can put off a kitchen refresh or a new deck. Contractors, on the other hand, are often working on jobs already in progress or under contract, making their spending stickier.
This dynamic could give Home Depot an edge when both retailers report earnings. If Home Depot's pro customer base is more resilient, it may be able to weather the current environment better than Lowe's, which relies more on the casual weekend warrior.
Promotions and tariffs in focus
Both chains have been using promotions to attract budget-conscious shoppers, a strategy that can pressure profit margins. Meanwhile, tariffs on imported goods—particularly from China—have raised costs on everything from power tools to lumber. Retailers can pass some of those costs to consumers, but doing so risks dampening demand.
Investors will be watching how each company manages these pressures. A company that can hold margins while still offering competitive prices is in a stronger position. The BofA note suggests Home Depot's contractor focus may give it more pricing power, since professionals are less likely to switch stores over a few dollars.
What it means for investors
For everyday investors, the takeaway is about the health of the housing and renovation market. Home improvement is a cyclical business—it booms when home prices rise and consumers feel wealthy, and it cools when rates are high and budgets tighten.
If Home Depot's pro business is indeed stronger, that could be a positive sign for the broader economy, since contractors are often a leading indicator of construction and remodeling activity. It also suggests that while DIY spending may be softening, the professional side of the market remains resilient.
That said, the BofA data is just one data point. Earnings reports will provide the full picture, including same-store sales, margins, and management guidance. Investors should also keep an eye on how tariffs are affecting costs and whether promotions are eating into profitability.
For those holding shares of either company, the key question is whether the pro vs. DIY mix will translate into better earnings. Home Depot's stock has historically traded at a premium to Lowe's, reflecting its stronger pro franchise. If that advantage holds, the gap may persist.
As always, past performance is no guarantee of future results, and individual circumstances vary. But for anyone watching the housing market, the next few weeks of earnings will offer a clear read on whether the renovation boom is cooling—or just shifting.
