Stronger Housing Data Should Lead To Beats From Home Depot And Lowe's
Estimize | Feb 24, 2015 12:28AM ET
This week we get fourth quarter earnings results from the country’s two largest home improvement retailers. Home Depot (NYSE:HD) is set to release earnings before tomorrow’s opening bell, and Lowe's (NYSE:LOW) is out Wednesday morning. Estimize is expecting both companies to slightly beat the Wall Street consensus. Specialty retailers have done well this season, the blended growth rate for earnings currently stands at 10.3%, with revenues up 5.0%.
Home Depot is expected to post fourth quarter EPS of $1.91, two pennies higher than the Street’s consensus. This would mark the eighth quarter of double digit earnings growth in the last nine quarters. Revenues are expected to come in at $18.73B, about $60M higher than the Wall Street prediction, and only 4.2% higher than the year-ago period. The country’s largest home improvement retailer is expected to benefit from an increase in consumer spending in the latest quarter backed by falling gasoline prices and a better employment picture which has left people with more discretionary income. Improving macroeconomic conditions in the U.S. have spurred activity in the housing market, which was particularly strong towards the end of 2014. Some issues that have plagued other S&P 500 companies this season, such as the stronger dollar, will not be a problem for Home Depot as 87% of their stores are located in the US. The company’s stock recently leapt to an all time high of $112.45 on Feb 19.
Lowe’s is the country’s second largest home improvement retailer and is set to report Wednesday before the bell. The Estimize consensus currently stands at $0.45, a penny higher than Wall Street. This would represent growth of 45%, the eighth consecutive quarter of double digit earnings growth. Revenues are expected to come in at $12.3B, about $20M higher than the Street, marking YoY growth of about 6%, which is still great for a company of this size. Lowe’s should benefit from the same macroeconomic improvements that Home Depot will. Existing home sales is one of the most important drivers for the industry because existing homeowners typically make home improvements before putting a house up for sale. In October existing home sales hit a one year high, and while that figure dipped in November, it rose again in December, making Q4 a strong one for the existing housing market.
Get The News You Want
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.