Home improvement stocks generally represent retailers and service providers selling products and services for existing-home maintenance, repair, and remodeling. Homebuilder stocks represent companies that build and sell homes. Both are exposed to housing, but through different channels: project purchases and repairs for retailers, and construction and home sales for builders.
To compare them, look beyond the sector label. Examine what each company sells, how demand reaches it, its margins and capital needs, and the risks its own business mix creates.
What does each type of company sell?
Home improvement retailers
A home improvement retailer earns revenue primarily by selling merchandise for projects and property upkeep. The Home Depot’s fiscal 2025 annual report describes products spanning home improvement, building materials, lawn and garden, décor, and facilities maintenance, repair, and operations (MRO). It also reports installation and tool and equipment rental services. The Home Depot fiscal 2025 annual report.
Homebuilders
A homebuilder earns most of its homebuilding revenue when it completes and sells homes. Some builders also operate adjacent businesses. D.R. Horton reports homebuilding, rental, residential lot development, financial services, and other activities, and offers homes ranging from entry-level to luxury across detached and attached formats. D.R. Horton fiscal 2025 annual report.
#1 Best Overall
How do their housing exposures differ?
Retailers’ demand is tied to purchases for existing properties and individual projects, including maintenance and remodeling. Builders’ demand is tied more directly to homes they construct and close, with buyer mix and product mix shaping results. This distinction follows from the companies’ reported operations; it does not mean every retailer or builder has identical exposure.
The channels can also move on different schedules. A repair or project purchase is not the same event as a buyer purchasing a newly built home. The category labels alone do not establish which business will perform better under a particular set of housing conditions.
Rank #2
What to compare in company filings
| Question | Home improvement retailer | Homebuilder |
|---|---|---|
| What is sold? | Products and related services for home projects and maintenance, such as installation or equipment rental where offered. | Completed homes, potentially alongside land, lots, rentals, or other operations. |
| What demand evidence should I inspect? | Comparable sales, transaction and average-ticket trends, merchandise mix, service contribution, inventory, and gross margin. | Orders and closings, selling prices, incentives, construction costs, land and lot position, cancellations, and community footprint. |
| What risks should I investigate? | Consumer spending, project timing, input sourcing, inventory management, and execution. | Housing demand, affordability, construction economics, land strategy, and execution. |
| What capital and operating questions matter? | Assess inventory and the costs of operating stores, services, and distribution company by company; the cited filing describes the business but does not establish a universal sector requirement. | Assess land and lot commitments, construction activity, and balance-sheet structure company by company; operating models differ. |
This is a research checklist, not a claim that every company in either category has the same margins, inventory burden, capital intensity, geography, or balance-sheet structure. Use each company’s filings to understand its actual business mix and financial risks.
What do the company examples show?
The Home Depot identifies itself as the world’s largest home improvement retailer based on fiscal 2025 net sales. It reported $164.7 billion in net sales and $14.2 billion in earnings for fiscal 2025. Its fiscal 2025 annual report.
Free tools Windows power users keep installed
One-click scans. No signup required.
D.R. Horton reported $34.3 billion in consolidated revenue for fiscal 2025, with homebuilding accounting for 92% of that revenue. Its fiscal year ended September 30, 2025. D.R. Horton fiscal 2025 annual report.
These figures illustrate different businesses and reporting measures; they are not a like-for-like comparison of scale, profitability, or stock value. Revenue and earnings figures by themselves do not show whether a stock is attractively valued.
How to research a stock in either category
- Read the business description. Identify what the company actually sells and how much revenue comes from adjacent activities such as services, rentals, land development, or financial services.
- Find the operating indicators that fit its model. For a retailer, review sales trends, transactions, ticket size, merchandise mix, and inventory. For a builder, review orders, closings, selling prices, incentives, construction costs, cancellations, and land position.
- Check margins, capital needs, and balance-sheet exposure. Compare companies within a relevant business model, and use the filings to determine how their own operations and commitments affect financial risk.
- Account for geography and customer mix. A company’s footprint and the buyers or customers it serves can matter; do not assume a sector-wide pattern without company evidence.
- Separate business analysis from valuation. A sound business description or strong reported results do not, on their own, establish that a stock is a good buy. Valuation and expected returns require separate analysis.
Examples of public companies and reporting dates
The Home Depot trades as HD on the NYSE, according to its fiscal 2024 Form 10-K. That filing’s fiscal year ended February 2, 2025; the company’s fiscal 2025 annual report is a separate reporting period. Home Depot fiscal 2024 Form 10-K.
D.R. Horton trades as DHI on the NYSE and NYSE Texas, as stated in its fiscal 2025 Form 10-K. D.R. Horton fiscal 2025 Form 10-K. Lowe’s official investor materials identify a 2025 annual report and show an April 16, 2026 report date; the figures discussed here do not include Lowe’s results. Lowe’s annual reports and proxy materials.
Recommended Free Tools
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
