Fitch changes ratings on Home Depot, Lowe’s

Fitch Rating, one of the nation’s leading credit rating services, has reassessed its outlook on Home Depot and Lowe’s following the retailers’ recent third-quarter earnings releases.

Home Depot received a boost to A- staus, maintaining its stable outlook, based on the Atlanta retailer’s operating momentum, strong cash flow and positive comp-store sales in seven of the past eight quarters. 

Home Depot’s shares recently traded at $37.12. Its market capitalization is $57.16 billion

Lowe’s rating was downgraded two levels to BBB+ with a stable outlook.  Fitch cited the North Carolina’s company’s soft operating results and its #2 position in the home-improvement industry. Fitch mentioned the housing market, unemployment and the slowly recovering remodeling market as headwinds facing both companies.

Lowe’s shares recently traded at $23.10. Its market capitalization is $29.11 billion. 

Last week, Home Depot reported its fiscal third-quarter earnings rose 13% and third-quarter sales increased 2.9%. Lowe’s posted a 44.3% drop in net income and 2.3% rise in sales. 

Fitch said it expects home improvement spending to increase 3% in 2011 and 4% in 2012, adding a gradual improvement in the economy could spur more home-improvement projects. 

Standard & Poor's, another major rating service, has also upgraded Home Depot while lowering its rating on Lowe’s.