Home Depot Q4 Earnings Preview: Could 'Slowing New Home Sales And Higher Mortgage Rates' Help The Stock?

Home improvement retailer Home Depot Inc HD could provide a gauge for home buying and choosing to refinance and repair when the company reports fourth-quarter financial results Tuesday before market open.

Here are the analyst earnings estimates, what experts are saying and key items to watch.

Earnings Estimates: Analysts expect Home Depot to report fourth-quarter revenue of $39.14 billion — up from $34.79 billion in last year's fourth quarter, as reported by Benzinga Pro.

The company has beaten analyst estimates for revenue in one straight quarter and six of the last 10 quarters overall.

Analysts expect the company to report earnings per share of $3.00 in the fourth quarter. That’s up from $2.82 in last year's fourth quarter. The company has beaten analyst estimates for earnings per share in more than 10 straight quarters.

What Experts Are Saying: Home Depot's recent financial results haven't done much to move the share price, Freedom Capital Markets Chief Global Strategist Jay Woods said in a weekly newsletter.

"Investors are hoping that slowing new home sales and higher mortgage rates lead to more home renovations that will help the company's bottom line. Over the last four quarters results have barely oved the needle. The range has varied between -1.28% and +1.23%," Woods said.

The market strategist said Home Depot stock is not in an ideal technical setup with a head-and-shoulders top formation.

In January, JPMorgan analyst Christopher Horvers said Home Depot has an advantage to rival Lowe's Companies LOW ahead of fourth-quarter financials.

"We believe HD is likely to outcomp LOW in 4Q," Horvers said.

The analyst highlighted consumer trends, technology and the company's acquisition of SRS Distribution as reasons for preferring Home Depot.

"HD continues to lead in terms of adopting technology to drive in-stocks and inventory productivity."

Here are recent analyst ratings on Home Depot and their price targets:

Telsey: Maintained Outperform rating, $455 price target
Wells Fargo: Maintained Overweight rating, raised price target from $440 to $450
Truist: Maintained Buy rating, raised price target from $465 to $467

Key Items to Watch: Same-store sales and revenue per visitor will be key metrics and come as a recent report from Placer.ai showed visitors to both Home Depot and Lowe's down on a year-over-year basis in the fourth quarter.

For Home Depot, visits were down 2.6% year-over-year in 2024 with a 3% decline during the fourth quarter.

Lowe's saw visits down 3.7% year-over-year in 2024, but recovered more in the fourth quarter with a 2.2% decline.

The Placer.ai report showed that Mother's Day, Memorial Day and Black Friday are the three busiest days for the home improvement retailers. Black Friday, which falls in the fourth quarter, had 79.1% more visitors for Home Depot than their daily average.

This data shows that customers may be waiting for sales on these holidays to go to the retailers. Data showed Home Depot and Lowe's had fewer return customer visits in the fourth quarter.

Home Depot's third quarter saw sales growth of 6.6% year-over-year with comparable sales down 1.3% and customer transactions down 0.2%.

The company highlighted engagement for seasonal goods and outdoor products. With the fourth quarter having some seasonal challenges in certain markets, analysts and investors will be looking for commentary on what the highlights were for the company.

Home Depot raised its full-year sales outlook after the third quarter.

Analysts and investors will be hoping for more color on what's anticipated in the next fiscal year.

Home Depot's results and share reaction could have a trickle effect to Lowe's, which reports quarterly results one day later on Wednesday.

ETFs that track the Dow Jones Industrial Average, like the SPDR Dow Jones Industrial Average ETF DIA, could also be volatile with Home Depot's report.

The company is the fourth largest holding in the Dow Jones Industrial Average due to its share-price weighting.

Price Action: Home Depot stock trades at $383.66 versus a 52-week trading range of $323.77 to $439.37. The stock is down 1.2% year-to-date and up 3.3% over the last year.

Lowe's shares are down 3.7% year-to-date and up 2.7% over the last year.

Both stocks trail the SPDR S&P 500 ETF Trust, which tracks the S&P 500. That ETF is up 2.8% year-to-date and up 18.8% over the last year.

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