Arhaus (NASDAQ:ARHS) vs. Home Depot (NYSE:HD) Critical Review

Home Depot (NYSE:HD) and Arhaus (NASDAQ:ARHS) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, risk, dividends and profitability.

Volatility & Risk

Home Depot has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Arhaus has a beta of 2.29, indicating that its stock price is 129% more volatile than the S&P 500.

Profitability

This table compares Home Depot and Arhaus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Depot	8.41%	106.42%	13.76%
Arhaus	4.91%	17.23%	4.94%

Insider and Institutional Ownership

70.9% of Home Depot shares are held by institutional investors. Comparatively, 27.9% of Arhaus shares are held by institutional investors. 0.1% of Home Depot shares are held by insiders. Comparatively, 1.2% of Arhaus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Home Depot and Arhaus”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Depot	$164.68 billion	1.76	$14.16 billion	$14.29	20.35
Arhaus	$1.38 billion	1.00	$67.26 million	$0.50	19.38

Home Depot has higher revenue and earnings than Arhaus. Arhaus is trading at a lower price-to-earnings ratio than Home Depot, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings for Home Depot and Arhaus, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Depot	1	13	18	1	2.58
Arhaus	0	4	5	1	2.70

Home Depot presently has a consensus price target of $375.93, indicating a potential upside of 29.28%. Arhaus has a consensus price target of $10.22, indicating a potential upside of 5.49%. Given Home Depot’s higher probable upside, equities research analysts clearly believe Home Depot is more favorable than Arhaus.

Summary

Home Depot beats Arhaus on 11 of the 14 factors compared between the two stocks.

About Home Depot

The Home Depot, Inc. operates as a home improvement retailer in the United States and internationally. It sells various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. The company also offers installation services for flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, and building service contractors, as well as specialty tradesmen, such as electricians, plumbers, and painters. It sells its products through websites, including homedepot.com; homedepot.ca and homedepot.com.mx; blinds.com, justblinds.com, and americanblinds.com for custom window coverings; thecompanystore.com, an online site for textiles and décor products; hdsupply.com for maintenance, repair, and operations (MRO) products and related services; and The Home Depot stores. The Home Depot, Inc. was incorporated in 1978 and is headquartered in Atlanta, Georgia.

About Arhaus

Arhaus, Inc. operates as a lifestyle brand and premium retailer in the home furnishings market in the United States. It provides merchandise assortments across various categories, including furniture, lighting, textiles, décor, and outdoor. The company's furniture products comprise bedroom, dining room, living room, and home office furnishings, which includes sofas, dining tables and chairs, accent chairs, console and coffee tables, beds, headboards, dressers, desks, bookcases, modular storage, and other items; and outdoor products, such as outdoor dining tables, chairs, chaises and other furniture, lighting, textiles, décor, umbrellas, and fire pits. It offers lighting products, including various distinct and artistic lighting fixtures comprising chandeliers, pendants, table and floor lamps, and sconces; textile products, such as handcrafted indoor and outdoor rugs, bed linens, and pillows and throws; and décor products, including various wall art to mirrors, vases to candles, and other decorative accessories. The company distributes its products through an omni-channel model comprising showrooms, e-commerce platform, print and digital media, and in-home designer services. Arhaus, Inc. was founded in 1986 and is headquartered in Boston Heights, Ohio.