Home improvement giants Home Depot (HD) and Lowe’s (LOW) will report third-quarter earnings this week. Home Depot reports earnings on Tuesday, while Lowe’s reports on Wednesday. HD stock and LOW stock fell.
Wall Street expects muted results, as the homebuying and renovation boom that’s lasted through most of the pandemic appears to be taking a breather. While borrowing rates remain low, rising labor costs and supply chain issues that have resulted in price spikes for building materials have consumers thinking twice about remodeling projects.
The price of lumber had been declining since its highs earlier in the pandemic, but have ticked up again recently. Lumber prices spiked to more than $1,600 per 1,000 board feet in May 2021. It had come back down to the $500 range in the summer. But it has since gone up above $600 over last month, hitting the $700 level in early October.
Homebuyers are also balking at sky-high prices in many areas of the country. In addition, consumers are pumping the brakes on home spending as food and gas prices soar amid rising inflation.
Home Depot Earnings
Estimates: FactSet expects Home Depot earnings per share of $3.41, 7% above the year-ago quarter. Revenue is seen coming in at $34.88 billion, 4% higher than last year.
Results: Check back Tuesday.
Home Depot Stock
Shares fell 0.4% to 371.08 on the stock market today. Home Depot stock blew past a cup-with-handle buy point of 338.64 several weeks ago and is now in a three-weeks tight pattern with an entry at 375.25, according to MarketSmith. Shares are trading well above their 50-day line, which is also rising.
Home Depot stock’s relative strength line is trending up and near multimonth highs. Its RS Rating is 81 out of a possible 99. Its EPS Rating is 90, as it’s notched five straight quarters of earnings growth. However, both revenue and earnings growth have slowed in recent quarters.
Rival home-improvement stock Floor & Decor (FND) eased 1.5%.
Estimates: Wall Street sees EPS of $2.34, 18% above the same period last year. Sales are expected to decline 1.4% to $22 billion. Same-store sales are seen falling 1.7% in the quarter.
Results: Check back Wednesday.
On Nov. 12, Lowe’s declared a quarterly cash dividend of 80 cents a share.
Stock: LOW stock fell 0.6% to 234.92. Shares are in a three-weeks-tight pattern with an entry at 239.37.
Lowe’s relative strength line is trending upward. Its RS Rating is 86, while its EPS Rating is 90.
Over the past year or so, Lowe’s has focused its attention on professional contractors. In a recent survey, Lowe’s says these customers worked on around 11 projects per month in 2021, and expect that figure to increase by 45% in 2022.
Please follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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