Home Depot Inc (NYSE:HD) could highlight the impact of the 2024 election, interest rate cuts and hurricanes when the company reports third-quarter financial results Tuesday, before the market opens.
Earnings Estimates: Analysts expect Home Depot to report third-quarter revenue of $39.17 billion, up from $37.71 billion in last year’s third quarter, according to data from Benzinga Pro.
Home Depot has missed analyst estimates for revenue in two straight quarters but beat estimates in six of the past 10 quarters.
Analysts expect the company to report earnings per share of $3.64, down from $3.81 in last year’s third quarter. The company has beaten analyst estimates for earnings per share in more than 10 straight quarters.
The company raised its full-year revenue guidance after second-quarter results to a year-over-year increase of 2.5% to 3.5%. Analysts and investors will closely monitor to see if the company maintains its raised guidance or raises guidance once again.
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Key Items to Watch: Home improvement retail traffic may have been down in the third quarter for Home Depot, according to data from Placer.ai. The report said that home improvement and furnishing sector store visits were down 0.9% year-over-year in the third quarter.
While Harbor Freight Tools and HomeGoods saw visits up 12.9% and 8.1% year-over-year, respectively, in the third quarter, Home Depot didn’t have the same good fortunes.
The report said Home Depot visits were down 3.1% year-over-year in the third quarter, while peer Lowe’s Companies (NYSE:LOW) also saw traffic down 4.1% year-over-year. Of the 13 weeks in the quarter, the sector saw positive visit growth in six of the weeks and negative visit growth in seven of the weeks.
Another item on watch will be the average ticket size for Home Depot in the third quarter. The company saw the average ticket in the second quarter come in down 1.3% year-over-year at $88.90. Sales per retail square foot also declined 3.6% year-over-year to $660.17.
With consumers looking to make home improvements instead of moving due to higher home purchase prices and mortgage rates, Home Depot could benefit in the quarter and moving forward.
Lower interest rates could also spur an increase in demand in big-ticket purchases and home repairs.
“The underlying long-term fundamentals supporting home improvement demand are strong. During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly,” Home Depot CEO Ted Decker said after second-quarter earnings.
Several large-scale hurricanes did significant damage in the U.S. in recent months. Home improvement companies can sometimes see a short-term benefit as homeowners are tasked with rebuilding and making repairs after the damages.
Home Depot’s report comes a week before Lowe’s Companies is set to report for the same quarter. Lowe’s has also beaten analyst estimates for earnings per share in more than 10 straight quarters. On the revenue side of things, Lowe’s has beaten analyst estimates in only four of the past 10 quarters.
Despite the revenue misses in recent quarters, Lowe’s stock has outperformed Home Depot, with the stock up 26% year-to-date compared to a 19% gain for Home Depot stock. Both stocks have underperformed the S&P 500, which is up 26.8% year-to-date.
With Lowe’s reporting one week later, there is a good chance that Home Depot shares could be volatile this week and the following week as analysts and investors often weigh the two companies against each other.
HD Price Action: Home Depot stock is up 1.19% to $410.73 on Monday versus a 52-week trading range of $287.24 to $421.56.
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