2022 wasn't a good year for investors in the home improvement industry. While the wider S&P 500 was down nearly 20%, Lowe's Companies (NYSE: LOW) declined by 23%. Its larger rival, Home Depot (NYSE: HD), fell by a bit more, too, as investors worried about falling home prices, weaker demand for new homes, and reduced home improvement spending ahead.

While rising interest rates do threaten to pressure Lowe's this year, cyclical downturns are a normal part of the retailer's business. With that in mind, let's look at Lowe's and its prospects for generating solid long-term returns for investors willing to patiently ride out the current volatility.

It's likely that Lowe's will still be trailing Home Depot in key financial and growth categories in a few years. There was a steady gap through the pandemic, after all, in metrics such as market share growth, profitability, and return on invested capital. The story didn't change much in 2022, either.

Continue reading

Source Fool.com