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Home Depot, Lowe's Seen Trimming Full-Year Outlook as Macro Pressures Build, Oppenheimer Says

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Home Depot, Lowe's Seen Trimming Full-Year Outlook as Macro Pressures Build, Oppenheimer Says

Home Depot (HD) and Lowe's (LOW) are likely to lower their full-year guidance as the home improvement retailers face pressure from weak consumer sentiment, Oppenheimer said Monday in a report.

The brokerage cut its estimates for fiscal first-quarter earnings and expects management at the companies to temper hopes for a second-half recovery. Home Depot is scheduled to release results on Tuesday, followed by Lowe's on Wednesday.

The companies are expected to report "soft" results mostly in line with Wall Street forecasts, the report said. Citing recent data, Oppenheimer said the companies are unlikely to see notable and sustained sales growth recovery yet.

"While we remain upbeat upon underlying health of home improvement retail, we are becoming incrementally concerned that shorter-term macro headwinds may be turning more challenging, as rates shift higher, and confidence wanes," the report said.

US consumer sentiment in May fell to an all-time low amid mounting inflation concerns, according to the University of Michigan, with cost pressures seen spreading beyond energy commodities as the Middle East conflict drags on. Annual inflation accelerated in April to the fastest pace in almost three years.

"While early in (fiscal 2026), we expect (Home Depot) and (Lowe's) to highlight an even more challenged macro, rising rates and moderating confidence, as reason to trim modestly financial expectations," the report said.

In February, Home Depot guided for full-year adjusted per-share earnings to be flat to up 4% versus last year's result of $14.69, while sales are forecast to rise 2.5% to 4.5% and comparable sales flat to up 2%.

Analysts in a FactSet poll expect non-GAAP EPS of $15.01, sales of $171.16 billion and same-store sales growth of 1.4%. In fiscal 2025, sales increased 3.2% to $164.68 billion, while comparable sales advanced 0.3%.

Lowe's projects fiscal 2026 adjusted EPS of $12.25 to $12.75 on sales of $92 billion to $94 billion, up 7% to 9% from a year earlier. Comparable sales are expected to be flat to up 2%.

The consensus on FactSet is for EPS of $12.58 on sales of $93.24 billion and same-store sales growth of 1.3%.

Oppenheimer cut its first-quarter EPS estimate for Home Depot to $3.38 from $3.58, while analysts surveyed by FactSet expect $3.41.

For Lowe's, Oppenheimer reduced its first-quarter EPS forecast to $2.96 from $3, versus the FactSet consensus of $2.97.

"Valuations for (the two stocks) have moderated meaningfully, suggesting more subdued near-term sentiment, likely lending support to shares, as fundamentals stay soft," the report said.

Home Depot shares rose 1.7% in Monday trading, and Lowe's gained 1.6%.

Price: $302.66, Change: $+5.15, Percent Change: +1.73%

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