Home Depot Vs Costco

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Home Depot Vs Costco

Home Depot Vs. Costco: Which Stock To Buy?

Home Depot (HD) and Costco (COST) are big names that are recognized by every shopper. When it comes to general merchandise, Costco is the market leader. On the other hand, Home Depot operates in the home improvement industry.

Both Costco and Home Depot are successful companies and big names in the stock market as well. So, if you really had to choose between Home Depot and Costco stock, which one should you buy? To answer this, we must take a closer look at Home Depot and Costco.

Costco Enjoys Strong Sales Growth

From FY 2020 - 2025, the same store sales growth for Costco remained positive. This is quite an impressive feat, given that the world went through so many things during that period.

So in a sense, Costco has managed to maintain growth despite the soaring inflation, COVID-19, supply chain bottlenecks, and so on.

Costco not only survived all of that, but its net sales also jumped by 65% during that period. Meanwhile, the net income of Costco increased by 103% during the same period.

Costco mainly attracts customers because of its wide selection of goods. The company sells pretty much everything at its stores, from groceries to appliances.

But the best part about Costco is that it offers the lowest prices. They also have a very successful membership model in which customers need to pay annual fees. So, Costco is also earning recurring revenue through its membership.

Home Depot's Sales Declined In FY23/24

If we look at Home Depot, it had a shaky ride from 2020 to 2025. During 2020 and 2021, the revenue jumped by 19.9% and 14.4%.

But in FY23 and FY24, a decline of 3.2% and 1.8% was seen in same-store sales. This mainly happened because the interest rates were high, and consumers were very selective with how they spent the money.

So, the higher interest rates and economic uncertainty stopped the customers from spending money on renovations and upgrades.

However, Home Depot is still a leader in its own industry and makes twice as much revenue as Lowe's. The home improvement industry is also very big, and Home Depot already holds a big portion of it. The things that work well for Home Depot are its scale, brand recognition, and broad inventory.

So, which stock to choose between these two? If you want the cheapest stock, then Home Depot is ideal as its P/E is only 25.4. But if you want a high-quality company with solid growth, then the answer is Costco.

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