Earnings Preview for the Home Depot (HD, RON, LOW)

The Home Depot HD is expected to announce its Q1 earnings results on Tuesday, May 17. Analysts expect earnings per share to reach $0.49, up 8.9% on $0.45 recorded in the same quarter last year. The Street's estimate was lowered by $0.01 in the last seven days. Revenues are expected to reach $17.02 billion, or 0.9% higher than in the same quarter last year. The Home Depot is a home improvement retailer. The Home Depot stores sell an assortment of building materials, home improvement and lawn and garden products and provide a number of services. Looking ahead, analysts expect earnings per share to surge to $0.83 in Q2, or 15.3% higher than in Q2 2010. For the year as a whole, earnings per share should reach $2.31, or 13.8% above the level recorded in 2010. As for revenues, after a slow start, analysts expect revenue growth to pick up in the rest of the year. In the upcoming quarter, revenues should reach $19.98 billion, a rise of 2.9% year-over-year. For the whole 2011, analysts expect revenues will be $69.78 billion, up 2.6% on 2010. Home Depot has been posting very strong profit growth results recently. In the past five quarterly reports, its profits grew at a double-digit rate. Its rival, Lowe's LOW had double-digit growth in three out of last five quarters, which is seen as a sign of a revival in the home improvement sector. Investors will be hoping this string of good quarterly results continues on Tuesday as well. Many investors will be encouraged by KPMG's survey of 152 chief financial officers and other financial executives in the retail sector, which showed that most of financial executives expect demand to rebound this year. Only 24% of retailers around the world expect significant improvement in their financial performance over 2010, however, while 51% predicted some improvement in financial performance, and 9% forecast a decline. Some factors played against Home Depot, above all weather problems in the north and northeast United States. Investors will be anxious to know the impact of weather problems on Home Depot's sales. Last week, Rona (RON), Home Depot's Canadian rival, reported wider than expected quarterly losses. Rating agencies seem to be optimistic on Home Depot's future. At the moment, 17 agencies have a Buy or Strong Buy on Home Depot, while 11 of them have a Hold rating. Home Depot's shares have been on a losing streak, however. On Friday, its shares lost 0.75% to close the week at $37.01. In the past 30 days, Home Depot lost 3.04% of its value.