Retail

What to Expect From Home Depot and Lowe's Earnings

Home Depot Inc. (NYSE: HD) and Lowe’s Companies Inc. (NYSE: LOW) are both set to report third-quarter results this week, after shares have performed stronger than previously expected following the hack at the former.

Home Depot will report earnings Tuesday before the market open. Thomson Reuters has consensus estimates of $1.13 in earnings per share (EPS) and $20.47 billion in revenue. In the third quarter of the previous year it reported $0.95 EPS and $19.47 billion in revenue.

Shares of Home Depot were up less than 1% at $98.81 in early trading Monday. The stock has a consensus analyst price target of $99.04 and a 52-week trading range of $73.96 to $99.36. The market cap is about $133 billion.

Lowe’s will report its earnings early Wednesday consensus estimates are $0.58 EPS and $13.55 billion in revenue. Its third quarter from the previous year had EPS of $0.47 on revenue of $12.96 billion.

Shares of Lowe’s were up nearly 1% at $59.08 Monday morning. The consensus price target is $57.48, and the 52-week trading range is $44.13 to $59.09. Lowe’s has a market cap of $58 billion.

After they continually pushed 52-week highs recently, Oppenheimer decided to take a look at these companies in the months following the hack. Overall the firm has a positive outlook for each company. Home Depot’s price target was increased to $115 from $101, which suggests an upside potential of 15% from current levels. Oppenheimer also increased Lowe’s price target to $70 from $60, which implies an upside of 20%.

The firm raised its fiscal year 2016 EPS forecasts, which are conservative expectations of recovery. These forecasts imply underlying drivers of stable margins and stringent cost controls. Oppenheimer has a fiscal year 2016 EPS forecast for Home Depot of $6.05, compared to a street estimate of $5.92. The firm also has a fiscal year 2016 EPS forecast for Lowe’s of $3.70, compared to a consensus estimate of $3.62.

The charts for each company appear to be near identical, when tracking the moving averages in relation to the stock, excluding the actual share prices of course. Shares of both Home Depot and Lowe’s briefly fell under their respective 50-day moving averages in mid-October during the market sell-off. Since then, shares of both companies have moved handily over their 50-day moving averages and are also moved well-above the 200-day moving averages.

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