Home Depot and Lowe's Earnings Preview: Professional Contractors Seen Outpacing DIY Spending

Home Depot and Lowe's are set to report earnings this week, with traders anticipating sizable moves in their stocks. Both companies are expected to show growing sales, but business from professional contractors is seen outpacing DIY spending.

The home-improvement retailers will report earnings on Tuesday and Wednesday morning, respectively. Recent options pricing suggests traders see Home Depot (HD) shares swinging up to 4% in either direction by the end of the week. A move of this size from Monday afternoon's level around $337 could see the stock rally as high as $350 or slip to $324.

Lowe's (LOW) stock is seen moving up to 5%, which could drive it as high as $225, or drag it below $205. Heading into the results, Home Depot shares are down about 2% for the year so far, while Lowe's has plunged 11%. The decline in Lowe's shares is due to concerns that squeezed consumers may continue to put off big-ticket spending on renovations and appliances.

Analysts expect Home Depot to report adjusted earnings of $4.73 per share on a 4% year-over-year rise in revenue to $47.28 billion. Lowe's is seen reporting adjusted EPS of $4.23 on a 9% jump in revenue to $26.09 billion.

Both retailers are projected to report same-store sales growth of just under 1% for the quarter, according to estimates compiled by Visible Alpha. Analysts are largely bullish on the stocks of both companies, with nine out of ten analysts tracked by Visible Alpha having 'buy' recommendations for Home Depot and ten out of eleven having bullish ratings for Lowe's.