Earnings preview: Will Home Depot (NYSE: HD) maintain momentum in Q3?

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Home improvement retailer Home Depot (NYSE: HD) is scheduled to publish its third-quarter earnings on Tuesday at 6:00 am ET. The general outlook indicates that the trend has not changed much since last year, in terms of performance. The consensus earnings estimate is $2.52 per share, which is almost flat year-over-year. The revenue estimate is $27.52 billion.

Home Depot (HD) beats Q2 earnings estimates but revenues miss mark

The retailer has an excellent track record of outpacing earnings forecasts, which shows that the chances of another beat are very high. The results would benefit from the ongoing digital push aimed at driving online traffic and initiatives to offer customers a multichannel experience. Also, the personalized shopping options being offered to Pro customers will likely lift volumes in that segment.

Bright Prospects

The positive economic momentum and upbeat labor market bode well for the company, which has been making investments to enhance growth under its integrated retail strategy. While the uptrend in the housing market keeps contributing to the top-line, falling lumber prices and high supply-chain costs have a negative impact on sales growth. Also, the continuing tariff-related uncertainties could be a drag on performance in the to-be-reported quarter.

Looking Back

Earnings rose 4% annually to $3.17 per share in the second quarter on revenues of $30.8 billion, up 1.2% year-over-year. The bottom-line topped the Street view, while revenues missed. Comparable sales growth remained relatively soft, continuing the recent trend.

Also read: Amazon (AMZN) stock tanks as Q3 earnings miss

Like its peers in the retail sector, Home Depot is headed to a busy holiday season, thereby winding up the fiscal year on a positive note. The fact that the company has remained resilient to the e-commerce invasion, to some extent due to the nature of the business, points to stable performance in the coming years.

Lowe’s to Report Q3

Lowe’s Companies (LOW), which competes with Home Depot for market share, will be releasing third-quarter numbers on November 20 early morning, with experts predicting a 30% growth in earnings to $1.35 per share.

Related: Home Depot Q2 2019 Earnings Conference Call Transcript

After gaining steadily since the beginning of the year, Home Depot shares climbed to an all-time high last month, outpacing the industry average and S&P 500 index. The stock, which traded slightly above $230 this week, advanced 33% in the past twelve months.

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