The Gates Foundation Trust bought $353 million in Home Depot as the home improvement retailer faces a housing slump. HD's premium valuation versus Lowe's is a key question.
The Bill & Melinda Gates Foundation Trust bought a new position in Home Depot (NYSE:HD) in the second quarter, worth roughly $353 million. The stock has fallen about 15% over the past year.
High mortgage rates and inflation are squeezing new home construction and renovation projects. That pressure hits Home Depot directly. The company expects the tough conditions to persist, guiding for fiscal 2026 comparable-sales growth of just 0% to 2%. That compares with 0.3% reported for 2025.
The strain extends beyond revenue. Home Depot is also dealing with shrinking profitability. The company forecasts 2026 adjusted operating margin of 12.4% to 12.6%, down from 13.1% the prior year.
Even after the stock decline, HD trades at roughly 23 times forward earnings. That is about 50% higher than the sector median and above the stock's five-year average. The premium reflects the company's brand strength and market dominance.
Lowe's Companies Inc (NYSE:LOW) offers a different valuation picture. LOW trades at about 17.5 times forward earnings and 12.7 times forward EBITDA. Home Depot trades at about 16.5 times EBITDA. The gap exists partly because Lowe's has smaller scale, weaker historical growth, and a less dominant position in the professional contractor market.
Bulls point to a potential housing recovery. The 21st Century ROAD to Housing Act could provide a longer-term tailwind. If housing activity picks up, Home Depot could return to mid-single-digit comparable sales growth and boost earnings.
The bear case centers on continued headwinds. If mortgage rates stay elevated, housing affordability remains poor, and consumer confidence stays weak, Home Depot could face another year of sluggish sales. Gross-margin pressure and higher interest costs could prevent earnings from growing even if revenue improves modestly.
The Gates Foundation's $353 million position signals one institutional view on the risk-reward trade-off. The stock page for HD offers more detail on the company's current valuation and positioning.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.