High Earnings Expectations For Home Depot, Not So Much For Target

• The parade of earnings reports from big retailers rolls on this week.
• Wall Street analysts have very different expectations for two big-box store operators.
• One of them beat earnings estimates in previous period and one was in line.

It's that time when big retailers to take their turns on the earnings stage. The latest quarterly numbers from big-box store operators Home Depot Inc HD and Target Corporation TGT will be among the highlights this week.

The consensus Wall Street forecasts see top and bottom line growth for the home improvement superstore operator for the three months that included the heart of hurricane season. On the other hand, the Minneapolis-based retail giant is expected to show earnings and revenue declines year over year, in the period when it announced a new share buyback plan.

Home Depot

When Home Depot shares its fiscal third-quarter results, the analysts on average predict that its earnings per share will have grown by $0.22 from a year ago to $1.58 per share. The $23.07 billion in expected revenue would be more than a 5 percent gain. This Atlanta-based specialty retailer matched the EPS estimate in the prior quarter, after beating expectations in earlier quarters.

The forecast from 105 Estimize respondents sees EPS from Home Depot coming in at $1.60. And the consensus revenue estimate for the three months that ended in October is $23.14 billion. However, Estimize narrowly overestimated both earnings and revenue in the previous quarter, after underestimating them in the previous two periods.

Target

Wall Street's consensus forecast for Target calls for EPS to have retreated from $0.86 in the same period of last year to $0.83. However, note that the second-largest discount retailer in the US topped EPS expectations by almost 10 percent in the previous quarter. The 26 Estimize respondents are a bit more optimistic, with an estimate of $0.87 per share for the three months that ended in October.

Like Wall Street, Estimize narrowly overestimated revenue in the previous quarter, and this time the respondents are looking for $16.45 billion. That would be around 7 percent lower than in the year-ago period. Wall Street is in the same ballpark with its consensus forecast of $16.34 billion. Either estimate represents almost no improvement on the top line from the past two quarters.

Home Depot is scheduled to report its latest results before the opening bell on Tuesday, while Target is on tap before trading begins on Wednesday.

Best Of The Rest

Other notable retailers also scheduled to report this week include Home Depot rival Lowe's, which like Best Buy, Foot Locker and TJX is expected to have a gain on the bottom line. From the world's largest retailer, Wal-Mart, an earnings decline, compared with a year ago, is anticipated. It will be in company with Abercrombie & Fitch, Dick's Sporting Goods, Gap, L Brands and Staples this week, if the analysts are correct.