Home Depot, Lowe's Expected to Surpass Q1 Estimates

Barclays analysts believe that Home Depot and Lowe's will surpass expectations in their Q1 results, despite ongoing housing market weakness and consumer uncertainty.

The firm notes that demand is gradually improving, with comparisons becoming easier due to the consensus estimates appearing reasonable and valuation attractive.

According to Barclays' company and supplier trackers, trends improved in the first quarter compared to the fourth quarter as both Home Depot and Lowe's benefited from the transition to spring, tax refunds, easing hurricane comparisons, and inflation.

The firm predicts comparable sales of around 1% for both companies, modestly above consensus expectations of around 0.5%, with big ticket items moderating sequentially and commodity inflation being neutral.