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Summary

  • This quarter there is some concern around Home Depot's earnings due to a slowing housing market.
  • However, business related to new construction and home improvement sales may give Home Depot a lift.
  • Wall Street is expecting Home Depot's earnings to grow by 16 cents per share compared to FQ1 of last year.

The Home Depot Inc. (NYSE:HD) is set to report FQ1 2015 earnings before the market opens on Tuesday, May 20th. Home Depot is an American home improvement and construction retailer. This quarter there is some concern around Home Depot's earnings due to a slowing housing market. Although fewer homes are being sold, the number of US housing starts has increased in each of the past three months. Business related to new construction and home improvement sales may give Home Depot a lift this quarter. On Tuesday Wall Street is expecting Home Depot's earnings to grow by 16 cents per share compared to FQ1 of last year while revenue is expected to grow by 4.4% year over year.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

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(Click here to see Estimates and Interactive Features for Home Depot.)

The current Wall Street consensus expectation is for Home Depot to report 99 cents EPS and $19.973B revenue while the current Estimize.com consensus from 27 Buy Side and Independent contributing analysts is $1.00 EPS and $20.093B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Home Depot to edge past the Wall Street consensus by 1 cent in earnings and a comfortable margin on sales.

Over the previous six quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Home Depot's EPS every time and has been more accurate in predicting revenue five times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger than usual differential in revenue expectations but a smaller difference than usual in earnings projections.

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The distribution of estimates published by analysts on the Estimize.com platform range from 90 cents to $1.03 per share and from $19.633B to $20.463B in revenues. This quarter we're seeing a moderate range of estimates on Home Depot.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signals less agreement in the market, which could mean greater volatility post earnings.

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Throughout the quarter the Wall Street EPS consensus fell from a high of $1.02 to 99 cents while the Estimize consensus dropped from $1.03 to $1.00. Meanwhile Wall Street reduced its revenue consensus from $20.240B to $19.973B while the Estimize consensus slid from $20.267B to $20.093B. Timeliness is correlated with accuracy and downward analyst revisions going into an earnings report are often a bearish indicator.

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The analyst with the highest estimate confidence rating this quarter is TechStockRadar who projects $1.01 EPS and $20.050B in revenue. TechStockRadar is ranked 13th overall among over 4,450 contributing analysts. Over the past two years TechStockRadar has been more accurate than Wall Street in forecasting EPS and revenue an impressive 66% and 63% of the time, respectively, throughout 535 estimates.

Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case TechStockRadar expects Home Depot to beat the Estimize consensus on EPS but come up short on sales.

Tuesday morning contributing analysts on the Estimize.com platform are expecting Home Depot to beat Wall Street's earnings expectations by 1 cent per share in profit and $969 million in sales. The Estimize community is expecting Home Depot to report earnings growth of 17 cents per share compared to last year and an increase in revenue of 5% on a year over year basis.

Disclosure: None.

Source: What The Buy Side Expects From Home Depot On Tuesday