Here’s what Wall Street is saying about Home Depot and Lowe’s ahead of earnings

Home Depot reports Tuesday BMO, while Lowe’s reports Wednesday BMO

Home improvement retailers Home Depot (HD) and Lowe’s (LOW) are scheduled to report results of their third quarters before the market open on Tuesday, November 15, and Wednesday, November 16, respectively. Home Depot’s conference call is scheduled for 9:00 am EDT on Tuesday and Lowe’s will hold its quarterly call on Wednesday at 9:00 am EDT. What to watch for:

HOUSING MARKET COMMENTARY: In a further signal that rising interest rates, building material bottlenecks and elevated home prices continue to weaken the housing market, builder sentiment fell for the 10th straight month in October and traffic of prospective buyers fell to its lowest level since 2012. Builder confidence in the market for newly built single-family homes dropped eight points in October to 38, half the level it was just six months ago, according to the National Association of Home Builders/Wells Fargo Housing Market Index, the lowest confidence reading since August 2012. "High mortgage rates approaching 7% have significantly weakened demand, particularly for first-time and first-generation prospective home buyers," said NAHB Chairman Jerry Konter.

OUTLOOK: In August, Lowe’s backed its FY22 EPS view of $13.10-$13.60 and revenue view of $97B-$99B, against analyst estimates at that time of $13.39 and $97.54B, respectively. The retailer said it expected FY22 comparable sales to be down 1% to up 1%. It added that it expects total and comparable sales toward the bottom end of its outlook range, and expects operating income and EPS toward the top end of its outlook range.

Meanwhile, Home Depot also backed its FY22 EPS view for up mid-single digits and revenue view up 3%, against analyst estimates at that time of $16.46 and $156.23B, respectively. It also forecast comp sales for the year up 3%. At the time, the retailer said it "could not feel better about the business," and that the acceleration of business in July had carried over into August.

‘LAGGED NEGATIVE REVISIONS’: JPMorgan analyst Christopher Horvers lowered the firm’s price target on Lowe’s to $205 from $235 and keeps a Neutral rating on the shares and lowered the firm’s price target on Home Depot to $300 from $347 and keeps an Overweight rating on the shares. Into 2023, the analyst believes housing names "should see a greater degree of lagged negative revisions."

‘MIXED SIGNALS’: MKM Partners analyst David Bellinger lowered the firm’s price target on Lowe’s to $205 from $220 and keeps a Neutral rating and on Home Depot to $312 from $330 and keeps a Neutral rating on the shares as part of a broader research note on Home Improvement names. Mixed signals across the housing spectrum put into question the forward demand outlook, although Q3 comps are likely to have held largely firm for both Home Depot and Lowe’s, the analyst tells investors in a research note.

LABOR UNION REJECTION: On November 7, Home Depot workers in Philadelphia rejected the first store-wide labor union, voting 165 to 51 against forming Home Depot Workers United, which would have represented 274 employees at the store, The Associated Press reports.

Keywords: earnings, quarterly earnings, earnings report, Q3, home improvement, DIY