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.
HD in upward trend: price rose above 50-day moving average on June 02, 2023
HD moved above its 50-day moving average on June 02, 2023 date and that indicates a change from a downward trend to an upward trend. In of 35 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on June 02, 2023. You may want to consider a long position or call options on HD as a result. In of 85 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 June 02, 2023. Looking at past instances where HD's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .
The 10-day moving average for HD crossed bullishly above the 50-day moving average on June 05, 2023. This indicates that the trend has shifted higher and could be considered a buy signal. In of 16 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 .
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 Stochastic Oscillator has been in the overbought zone for 2 days. Expect a price pull-back in the near future.
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 07, 2023. 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.
The Aroon Indicator for HD entered a downward trend on May 25, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
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 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 PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent 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 Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued 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.
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 (833.333) is very high in comparison to the industry average of (13.763). P/E Ratio (18.382) is within average values for comparable stocks, (25.211). Projected Growth (PEG Ratio) (1.976) is also within normal values, averaging (2.521). Dividend Yield (0.026) settles around the average of (0.037) among similar stocks. P/S Ratio (1.976) is also within normal values, averaging (69.877).
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Industry description
Market Cap
High and low price notable news
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a retailer of assortment of building materials and home improvement products
Industry SpecialtyStores
HD and
Correlation & Price change
A.I.dvisor indicates that over the last year, HD has been closely correlated with LOW. These tickers have moved in lockstep 91% of the time. This A.I.-generated data suggests there is a high statistical probability that if HD jumps, then LOW could also see price increases.
