NEW YORK (MONEY) -- Lowe's companies reported disappointing results on Monday, following negative earnings news last week from Home Depot. Both companies have said that they expect a weaker second half of 2006.

The prices of both stocks have fallen at least 18 percent from their highs earlier this year and, as a result, both trade at low price/earnings ratios. While everyone agrees that the two big do-it-yourself retailers will face a tough business climate in the months to come, the key question for value investors is how long it will take for the sector to improve.

Fact is, the recent earnings reports weren't all that bad. Home Depot actually beat analysts' projections and reported a 9.8 percent increase in earnings per share on a 16.7 percent gain in sales. Lowe's reported a 15.4 percent rise in earnings per share on 12 percent higher sales.

When you analyze the numbers more closely and take various adjustments into account, the gains look a little less impressive. And all things considered, the two companies aren't living up to the high expectations for this type of specialty retailing. Still, such results aren't so terrible for big growth stocks.

Looking out to the second half, high gas prices could discourage trips to the mall. And home sales are slowing, which inevitably correlates with poorer results for DIY retailers.

If Home Depot (Charts) and Lowe's (Charts) were trading at much higher P/E ratios - above 20, say - investors would have legitimate grounds to worry. They might also worry if earnings seemed likely to decline. A 25 percent drop in profits turns a 15 P/E into a 20 P/E. That's the wrong kind of multiple expansion.

But neither of those things is true. At $34.30, Home Depot is trading at 12 times this year's estimated earnings. And at $28.35, Lowe's is trading at 14 times earnings. Full-year results for both are expected to show at least high single-digit percentage gains.

Moreover, both companies continue to invest heavily in their operations. Lowe's plans to open 155 stores in 2006, representing a 12 percent increase in square footage. Home Depot is not adding as many stores but is providing additional services.

In addition, both companies are buying back large amounts of stock, which will bolster earnings growth. Home Depot, in particular, has bought back 17 percent of its outstanding stock since 2002.

The bottom line: Both these stocks are untimely if you are focused on the next quarter or two. But both are continuing the growth strategies they have in place. Analysts project compound annual earnings growth of more than 12 percent over the next five years.

For patient, value-oriented investors these stocks look like bargains. You may not know how long you'll have to wait for their stocks to pay off - but at least you'll know you're getting in at a good price.

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