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Vitalii Liubimov's Avatar
published in Blogs
Nov 12, 2020

Big Box Home Improvement Retailers Set to Report Earnings

The global health crisis has had a mixed impact on the retail sector. Some segments of the industry have seen sales increase as consumers adjust to the new normal while others are struggling as consumer preferences have changed. Retailers with a strong presence in traditional shopping malls have been hit especially hard while retailers with stand-alone stores have fared much better.

Obviously the sales are being impacted by the nature of the goods the companies sell as well. One segment that appears to be doing well is the home improvement group of retailers. With more and more people working from we are seeing a boom in housing numbers and I’m guessing we are seeing a boom in home improvement projects. Because we are spending more time at home, people are looking to change their living spaces, whether it means buying a new home or modifying their current home to include a home office.

Two of the biggest home improvement retailers, Home Depot (HD) and Lowe’s (LOW), are set to report earnings next week and both are expected to see solid earnings and revenue growth for the quarter. Home Depot’s consensus EPS estimate is $3.01 for the quarter and that is 19% higher than the company reported last year. Revenue is expected to increase by 16.4%.

Lowe’s is expected to do even better. The EPS estimate is $1.97 and that is 39.7% higher than the $1.41 the company reported in the third quarter of 2019. Revenue is expected to jump by 21.4%.

The sentiment indicators reflect what we see from the earnings estimates as well with higher expectations for Lowe’s than Home Depot. There are 33 analysts following Home Depot with 60.6% rating the stock as a “buy”. There are 31 analysts covering Lowe’s and 74.2% rate the stock as a “buy”. The short interest ratio for both stocks is below average, but Lowe’s is lower at 1.2 compared to 1.7 for Home Depot. What these indicators suggest is that optimism is running pretty high for Lowe’s ahead of the earnings report.

Turning our attention to Tickeron’s scorecard grades for the two stocks, we see a “strong buy” grade for Lowe’s and a “buy” rating for Home Depot. Something to remember about the scorecard grades from Tickeron is that they are based entirely on artificial intelligence and the statistics calculated by the platform—there isn’t any human opinion or bias in the calculations.

The entire comparison shows that the technical analysis is pretty even, but Home Depot actually does a little better on the fundamental side.

Related Ticker: HD

HD in upward trend: 10-day moving average moved above 50-day moving average on June 17, 2024

The 10-day moving average for HD crossed bullishly above the 50-day moving average on June 17, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 15 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on June 06, 2024. You may want to consider a long position or call options on HD as a result. In of 91 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for HD just turned positive on May 31, 2024. Looking at past instances where HD's MACD turned positive, the stock continued to rise in of 52 cases over the following month. The odds of a continued upward trend are .

HD moved above its 50-day moving average on June 12, 2024 date and that indicates a change from a downward trend to an upward trend.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where HD advanced for three days, in of 357 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The RSI Indicator demonstrated that the stock has entered the overbought zone. This may point to a price pull-back soon.

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 5 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where HD declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

HD broke above its upper Bollinger Band on June 12, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 86%.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 76, placing this stock better than average.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. HD’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: HD's P/B Ratio (344.828) is very high in comparison to the industry average of (11.667). P/E Ratio (24.357) is within average values for comparable stocks, (35.049). Projected Growth (PEG Ratio) (2.045) is also within normal values, averaging (2.519). Dividend Yield (0.023) settles around the average of (0.034) among similar stocks. P/S Ratio (2.415) is also within normal values, averaging (89.723).

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

Notable companies

The most notable companies in this group are Home Depot (NYSE:HD), Lowe's Companies (NYSE:LOW), AutoZone (NYSE:AZO), Tractor Supply Company (NASDAQ:TSCO), Ulta Beauty (NASDAQ:ULTA), Best Buy Company (NYSE:BBY), Bath & Body Works (NYSE:BBWI), Five Below (NASDAQ:FIVE), RH (NYSE:RH), Advance Auto Parts (NYSE:AAP).

Industry description

The specialty stores sector includes companies dedicated to the sale of retail products focused on a single product category, such as clothing, carpet, books, or office supplies. A specialty store could face intense competition from big-box departmental chains, and therefore offering an adequate collection of the product type it specializes in is key in maintaining/growing its market.

Market Cap

The average market capitalization across the Specialty Stores Industry is 8.27B. The market cap for tickers in the group ranges from 48 to 380.15B. HD holds the highest valuation in this group at 380.15B. The lowest valued company is CALI at 48.

High and low price notable news

The average weekly price growth across all stocks in the Specialty Stores Industry was -1%. For the same Industry, the average monthly price growth was -1%, and the average quarterly price growth was 61%. ALLG experienced the highest price growth at 121%, while LNBY experienced the biggest fall at -51%.

Volume

The average weekly volume growth across all stocks in the Specialty Stores Industry was -54%. For the same stocks of the Industry, the average monthly volume growth was -41% and the average quarterly volume growth was 28%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 44
P/E Growth Rating: 55
Price Growth Rating: 56
SMR Rating: 69
Profit Risk Rating: 76
Seasonality Score: 16 (-100 ... +100)
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General Information

a retailer of assortment of building materials and home improvement products

Industry SpecialtyStores

Profile
Fundamentals
Details
Industry
Home Improvement Chains
Address
2455 Paces Ferry Road
Phone
+1 770 433-8211
Employees
463100
Web
https://www.homedepot.com
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