Earnings Preview: The Home Depot

The Home Depot (HD) is expected to report Q3 earnings before market open Tuesday, November 18 with a conference call scheduled for 9:00 am ET.

Guidance

Analysts are looking for a profit of 39c on revenue of $17.74B. The consensus range is 32c to 44c for EPS, and revenue of $17.45B to $18.29B, according to First Call. In August, Home Depot forecast FY08 EPS down 24% vs. previous forecast of down 19% to 24% on sales down 5% vs. previous forecast of down 3% to 5%. According to a recent America's Research Group survey, Home Depot and other retailers could lose up to 8% of their holiday sales this year because stores and lenders are limiting credit. Like other home improvement retailers, Home Depot is trying to contend with with a collapsed housing market, a dismal economy, and customers looking to cut back and are hesitant to spend on big-ticket improvement projects.

Analyst Views

Deutsche Bank analyst Mike Baker expects Home Depot to report weak results and believes it will also post lower same-store sales. Jefferies believes Home Depot should top the "low" consensus estimates for Q3, but feels softening mortgage applications data and the tight credit markets could lead to slippage in existing home sales again. Analysts and investors will listen for comments on Home Depot's outlook as well as any comments on the housing and credit industries.