Home Depot Inc (NYSE: HD) is expected to report earnings on Tuesday morning before the market opens, and investors are hoping the home improvement leader can overcome unfavorable weather in the first quarter and deliver another strong report. Analysts are optimistic about Home Depot’s long-term outlook, but the first quarter may be a difficult one for HD stock.
Analysts are calling for Home Depot to report earnings per share of $2.06 on revenue of $25.21 billion. Those numbers would represent year-over-year earnings growth of 23.3 percent and revenue growth of 5.5 percent.
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Analysts are also calling for same-store sales growth of 6 percent. Last quarter, Home Depot reported same-store sales growth of 7.5 percent. Home Depot has previously guided for full-year 2018 same-store sales growth of 5 percent and revenue growth of 6.5 percent.
Home Depot and competitor Lowe’s Companies ( LOW) have thrived in recent quarters on the strength of a booming U.S. housing market. Analysts say both companies are also mostly immune to the type of online competition that is threatening much of the rest of the U.S. retail sector.
Unfortunately, the weather did not cooperate in the first quarter of 2018, and Bank of America analyst Elizabeth Suzuki says a particularly cold and snowy winter likely weighed on both Home Depot and Lowe’s in the first quarter.
“While these retailers do sell products for winter weather such as snow shovels and heating fuel, a larger percentage of their business is dependent on products for warm-weather projects, including outdoor renovations and lawn and garden,” Suzuki says.
Both companies have exposure to the U.S. northeast, which was hit hardest by the winter weather. However, Suzuki says Lowe’s has a larger footprint in that region than Home Depot.
Suzuki is expecting Home Depot to report EPS of $2.02 and same-store sales growth of just 4.5 percent in the first quarter, below consensus estimates. She is also forecasting full-year same-store sales growth of 5.1 percent.
Despite predicting an earnings miss on Tuesday, Suzuki remains bullish on HD stock.
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“We think the combination of the aging of millennials, the underinvestment in U.S. homes and turnover from the baby boomer generation will drive a strong home improvement industry for the next several years,” she says.
Bank of America has a “buy” rating and $215 price target for HD stock.
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Home Depot Inc Earnings: What to Expect from HD Stock originally appeared on usnews.com
