Barclays Sees Home Depot, Lowe's Q2 Results on Track Despite Housing Weakness
Barclays predicts that Home Depot and Lowe's will meet consensus estimates for their second-quarter results, despite ongoing housing market weakness and consumer uncertainty. The investment bank notes that home improvement demand appears stable to slightly improving, which should support results that match expectations. Sales are currently running slightly positive without significant housing market support, according to Barclays.
The firm attributes the recent decline in both stocks' prices to recent rate movements and the risk of further housing deterioration. However, it views this as an entry point for investors, highlighting that valuations remain attractive. The bank maintains an overweight rating on both companies, citing progress in Home Depot's professional customer segment and Lowe's relative value compared to other segment leaders.
The gap between GDP and private residential fixed investment is at its widest since the post-COVID period and the last housing recession, according to Barclays. The firm notes that this metric typically coincides with the performance of Home Depot and Lowe's stock. With estimates appearing reasonable for this year, the bank believes that both companies' results will align with consensus expectations.