NEW YORK (CNN/Money) - Do-it yourselfers can repair a lot of things with stuff from Home Depot and Lowe's. Unfortunately, their stock prices can't be fixed with hammers and nails.

Despite continuing to turn in solid results, Lowe's was down 19 percent in 2002. And Home Depot was crushed more than 50 percent.

To be sure, Home Depot had a rotten 2002, and warned on Thursday after the closing bell that sales and earnings for its fiscal fourth quarter and year, which ends on February 2, would be lower than expected. In a statement, Home Depot CEO Bob Nardelli issued the following ominous statement, "These business trends indicate the likelihood of a challenging environment well into the next fiscal year."

Home Depot shares fell 14 percent on Friday, and Lowe's was down 6 percent in sympathy, despite affirming that it is on track to meet forecasts.

But now the question is, have the stocks been hit a little too hard by Wall Street's 2X4?

This time last year, the knock on both Home Depot and Lowe's was that they were too expensive. Home Depot had a P/E of 33 (based on estimates for this fiscal year) and Lowe's had a P/E of 30.

And since the red-hot housing market would have to cool off, there's no way Home Depot and Lowe's could continue to justify these prices.

But the widely expected implosion of the housing market still hasn't taken place. The Commerce Department announced on Friday that new construction spending increased at a higher-than-expected rate in November. In addition, October's figures were revised upwards. And new home sales surged in November as well.

Can housing continue on such a tear? Probably not. But it looks like the eventual pull-back is priced into both the stocks of Home Depot and Lowe's. Home Depot is now trading at just 12 times earnings estimates for its next fiscal year, ending in January 2004. Lowe's P/E is less than 18. Home Depot is trading at less than one times sales for the past twelve months while Lowe's trades at just 1.1 times trailing sales.

In addition, the fundamentals for both companies are still intact. Though cutting forecasts, the revised Home Depot forecast still calls for 19 percent earnings growth for the past year. For the coming year, the estimate is for 13 percent growth. Lowe's is on track for 20 percent growth for the past year, and 18.5 percent for the coming year.

Plus, both companies pay dividends and have a history of increasing them. Home Depot's yield has even risen to about 1 percent due to its huge stock drop. Its dividend has increased 27 percent over the past five years. But it doesn't appear that the dividend is in jeopardy of being cut since Home Depot pays less than 20 percent of its earnings as a dividend and since it has a healthy balance sheet.

Lowe's dividend yield is relatively tiny, at 0.3 percent. But the company has increased the dividend by 8.3 percent over the past five years. There is also ample room for more dividend growth. Lowe's currently pays out less than 10 percent of its earnings back to shareholders and it also has a healthy balance sheet.

Even though both companies now appear to be reasonably valued, several analysts are more bullish on Lowe's. Deutsche Bank analyst Michael Baker downgraded Home Depot to a rare "sell" rating on Friday and reiterated his "buy" rating on Lowe's.

And Donald Trott, an analyst with Jefferies, cut his fiscal 2004 earnings estimate for Home Depot from $1.80 a share to $1.75 on Friday, citing in his research note that Lowe's was the better managed company.

Lowe's clearly is the hotter company. After all, Home Depot said it expects same-store sales, or sales open at least a year, to decline 10 percent in its fourth quarter. Home Depot needs to revamp its stores in order to better compete against the smaller Lowe's, which said it was comfortable with estimates of same-store sales growth between 2 and 4 percent.

"Lowe's is taking market share from Home Depot. They are executing very well and continuing to modernize their stores," says David Campbell, an analyst with Davenport & Co. Campbell owns shares of Lowe's and Davenport has not performed investment banking for either Lowe's or Home Depot.

But considering that both stocks tend to trade in tandem and are far more attractively valued than a year ago, it looks like the shellacking that Home Depot and Lowe's took on Friday might have been a bit much.