Home Depot, Lowe’s On Track To Grow 2022 Earnings

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  • Home Depot plans to report its second quarter on August 16
  • Lowe’s reports its second quarter on August 17
  • Both stocks are trading above their 50-day moving averages

Home Depot (NYSE: HD )

and Lowe’s (NYSE: LOW ) have become ubiquitous sightings in every American city and town, large and small. Both home improvement giants operate north of 2,200 stores each.

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Both are on deck to report earnings next week.

I may be unique among home improvement consumers, but I’ll often go to both interchangeably. The only reason Lowe’s wins often is because it’s about five minutes closer to my house.

But in reality, the two companies operate their businesses differently, relying on different suppliers and emphasizing different products in the mix.

For example, in 2020, Home Depot said it would invest $1.2 billion to build about 150 new facilities designed to reach 90 percent of U.S. customers with same-day or next-day delivery. These centers are called centers of flat distribution.

In the meantime, Lowe’s last month it launched In the Blue: Lowe’s Product Pitch Event, which invites small businesses to pitch their products, which Lowe’s might offer for sale.

In an interview with the Charlotte Business Journal, Lowe’s senior vice president of global merchandising Sarah Dodd said, “It’s hard for smaller businesses, entrepreneurs or people to get in front of Lowe’s shoppers, and this is a great opportunity to do that in a live pitch environment. This is a way for them to make their voices and ideas heard.”

Beating analysts’ opinions

Home Depot plans to report its second quarter on Aug. 16, with analysts forecasting earnings per share of $4.95 per share on revenue of $43.38 billion. This would mark increases over the year-ago quarter.

Earnings data from MarketBeat shows that Home Depot beat analysts’ earnings views in each of the past eight quarters. It beat revenue expectations in the past nine quarters.

Of course, the home buying and home remodeling boom of the Covid era spurred massive growth. Home Depot grew earnings at double-digit rates between July 2020 and January of this year. Revenues were also in double digits in six of the past eight quarters.

Analysts expect Home Depot to post revenue of $156 billion for the full year. Earnings are seen at $16.48 per share this year, up 6% from 2021. This consensus estimate was most recently revised.

Next year will see it rise another 5% to $17.33 per share.

Growth of the construction boom

The Wall Street consensus on Home Depot is a “Moderate Buy” with a $368.45 price target, 18.11% upside, according to MarketBeat analysts ratings.

Lowe’s also enjoyed the growth of the construction boom. Earnings rose at double-digit rates in six of the past eight quarters. Lowe’s revenue growth has slowed to single digits in the past four quarters, after a boom in late 2020 and early 2020.

Lowe’s has built a name for itself as a low-cost supplier. It also works with suppliers to reduce costs, which are then passed on to customers.

Analysts expect Lowe’s to bring in $97 billion in sales for the year. They also have a “moderate buy” rating on the stock, with a $238.58 price target, representing a 18.20% upside.

Lowe’s reports its second quarter on August 17, the day after Home Depot reports. It was seen to generate earnings per share of $4.65 on revenue of $28.26 billion.

This year, which is fiscal 2023, earnings are expected to reach $13.44 per share, up 11%. For fiscal 2024, it has been seen rising another 9% to $14.59 per share.
Home Depot, Lowes on track to grow 2022 earnings

So are any of these a buy right now?

Home Depot has corrected 24.46% since last year. It has rallied recently, advancing 9.15% for the month and 4.17% over the past three months. It remains above its June 22 low of $264.51.

Meanwhile, Lowe’s is down 21.96% so far this year and up 11.26% last month and 2.15% over the past three months. It has also risen from its June low of $170.12.

Both stocks are trading above their 50-day moving averages, but below their 200-day lines. While the short-term line remains below the longer line, it’s often an indicator that the stock still doesn’t have enough momentum to stage a rally, despite strong fundamentals.
Home Depot, Lowes on track to grow 2022 earnings

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