Home Depot, Lowe's: The Fight for Head of Household

NEW YORK (TheStreet) -- Since the crash of the housing bubble, Home Depot(HD) and Lowe's(LOW) have been in a neck and neck race to prove to investors that not only is "home where the heart is" but it is also where to shelter profits. Looking at the chart below and how these two have trended since bottoming out in 2009, it is hard to dispute that they have indeed made a decent case to own their stocks.

But as the race continues, the question of value gets a bit more complicated. Because although these have produced some solid returns in addition to offering two of the best yields on the market, how do investors avoid the heartache of a broken home -- considering that both stocks are now only percentage points away from their 52-week highs. In other words, should investors continue to build their portfolios with these two names, or find shelter elsewhere? Nothing does a better job of helping to answer these sorts of questions than an earnings report. On Tuesday, Home Depot was first up to issue a tour to demonstrate just how orderly its own house is.

For the tenth consecutive quarter -- ending April 29, the retail giant enjoyed double-digit EPS growth, helped by what I have personally experienced to be a renewed focus on customer service. In the recent quarter, Home Depot earned 65 cents per share and 68 cents on a GAAP basis -- representing an increase of 36% from the previous year. Revenues arrived at $17.81 billion or 6% increase year-over-year from the $16.82 billion. What was remarkable in all of this is that the company was able to improve both its gross margins and operating margins by 10 and 110 basis points better than last year's quarter, with net margin also improving by 100.

Next up will be Lowe's and the market will be looking for earnings per share of 42 cents which would represent an increase of 23.5% from the previous year. Optimism in its numbers has grown over the past several months as it was once expected to report EPS that was 4 cents lower dating back to the beginning of March. If Home Depot's numbers served any indication, Lowe's should have no problem exceeding its number, which includes an expected increase in revenue of almost 7%. But the question is, will these numbers be enough to convince the market that the stock deserves to go higher? Perhaps, and perhaps not.