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Home Depot, Lowe's Quarterly Results Unlikely to Show Signs of Recovery Amid Macro Pressures, Oppenheimer Says

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Home Depot, Lowe's Quarterly Results Unlikely to Show Signs of Recovery Amid Macro Pressures, Oppenheimer Says

Home improvement retailers Home Depot (HD) and Lowe's (LOW) second-quarter results are unlikely to show meaningful signs of recovery amid persistent macroeconomic pressures, Oppenheimer said in a Friday note.

Oppenheimer is projecting second-quarter earnings per share of $4.66 for Home Depot, which would indicate a 0.5% decline year over year. The brokerage expects Home Depot's comparable sales for the quarter to be flat to up 1%. Analysts polled by FactSet expect adjusted EPS of $4.73 and same-store sales growth of 0.9%.

Oppenheimer expects Lowe's second-quarter EPS to match Wall Street's estimate, which it put at $4.24, while projecting comparable sales growth of 1%, in line with management's expectations, which the brokerage described as "subdued."

The market is eager to turn more constructive on Home Depot and the broader sector on the prospect of a long-awaited cyclical recovery, Oppenheimer said. However, the brokerage believes the recent increase in Home Depot's shares could prove "premature" given continued softness in sector data.

Home Depot is scheduled to release its results on Aug. 18, while Lowe's reports the following day.

"We are hard-pressed to envision second quarter results from the chains yielding meaningful 'green shoots' suggestive of long-awaited, sustained demand recovery within home improvement," analysts Brian Nagel and Andrew Chasanoff said in the note.

The brokerage said it previously highlighted the potential for moderating interest rates as a tailwind for Home Depot and Lowe's. However, it is now turning "less optimistic" about rates declining meaningfully in the near term.

Price: $338.26, Change: $-3.44, Percent Change: -1.01%

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