Home Depot Q3 earnings on deck: What to expect

Home Depot (NYSE:HD) is set to post third quarter results on Tuesday, before markets open.

Wall Street expects the Atlanta-based company to post EPS of $3.65 on revenue of $39.22 billion during the quarter, implying a rise of 4% year-over-year.

Higher interest rate and soft macroeconomic environment has dampened consumer demand for certain big-ticket, discretionary categories, hurting home improvement retailers such as Home Depot and Lowe’s (LOW).

Earlier in August, Home Depot posted quarterly results ahead of consensus estimates, but set its full-year guidance below expectations, blaming the continued uncertainty around consumer demand.

Over the last one year, Home Depot has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.

Wedbush said it is looking for mostly in-line Q3 results from Home Depot and expects it to reiterate or narrow full-year outlook.

However, Wedbush analyst Seth Basham is still optimistic, given the modest improvement in housing indicators including mortgage refinancing and housing affordability.

“We expect most pulled forward demand during the pandemic to be unwound by the end of 2024 including categories such as patio and grills, leading to less drag in 2025,” noted Basham.

A recent Seeking Alpha analysis by Juxtaposed Ideas also pointed out that “Home Depot’s intermediate-term prospects are brighter,” thanks to the Fed’s rate cut, the potential boom in real estate sales, along with the one-time potential hurricane-related sales.

Seeking Alpha analysts and Seeking Alpha’s Quant ratings are cautious and consider the stock a Hold, while Wall Street rated it a Buy.

Over the last three months, EPS estimates have seen no upward revisions, compared to 27 downward revisions, while revenue estimates have been revised upwards 15 times versus 11 downward moves.

The stock has gained over 18% so far this year, compared to the nearly 26% rise in the broader S&P500 Index.