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By Jeremy Glaser and Christine Benz | 02-26-2016 06:00 AM

Friday Five: Victors and Values in Retail

Although Lowe's underperformed Home Depot last quarter, it looks like the better bargain today. Plus, Macy's and Target try to turn things around, and more.

Christine Benz: Hi, I'm Christine Benz for Morningstar. Welcome to The Friday Five. Joining me to discuss the top market news from the past week is Morningstar markets editor Jeremy Glaser.

Jeremy, thank you so much for being here.

Jeremy Glaser: You're welcome, Christine.

Benz: Some of the big retailers released earnings for the fourth quarter this past week. Some of the big home-improvement chains released earnings. But before we get into their results, let's talk a little bit about the housing sector in general.

Glaser: We've seen some choppy data out of housing due to everything from changes to the way mortgage applications are processed to weather, and that's impacted the numbers. We saw that again this month, where existing home sales looked really strong, and new home sales were below expectations. Overall, Bob Johnson, Morningstar's director of economic analysis, thinks that housing is on track and that we are going to see it be a positive contributor to GDP this year, as it was in 2015.

One of the reasons we do track housing is that beyond just commissions on existing home sales or what's happening with new home sales, there are a lot of knock-on effects as people go to Home Depot or Lowe's to buy what they need to fix up their homes. We saw that this quarter with Home Depot results yet again looking very strong. They have been on a winning streak recently. Unfortunately, that's very much priced into the shares right now. We don't think that there is a lot of value there.

Lowe's on the other hand had a good quarter but not nearly as good as Home Depot. Lowe's had some other one-time charges that clouded results a little bit, and we actually do see more value in Lowe's today.

Benz: Another big retailer, Target, had a fairly good quarter. How has it done in terms of rebounding from some of the high-profile problems it had a year or so ago?

Glaser: Target has been having some issues. If you remember the credit card data breach weighed on them. They exited their ill-fated foray into Canada and took a big charge.

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