Earnings Preview: Home Depot

"Signs of improvement in Home Depot's business and housing overall keep our rating favorable at a Buy," he wrote. Still, he said one caveat is the uncertain amount of time a recovery in consumer confidence will take. "Homeowners may hesitate to reinvest in the home for some time as values remain substantially below peak levels," he wrote.

Deutsche Bank analyst Mike Baker said in a note to investors last week that several indicators he watches show housing trends have likely bottomed, but have yet to improve significantly.

"Supplier indications are for the most part stable versus the previous quarter, while retail sales data from the industry are tracking worse than the second quarter," he wrote. "On the other hand, increases in home sales and smaller declines in home prices, if sustainable," point to a rebound in sales at stores open at least one year by early next year, he wrote.

WHATS AHEAD: Analysts will be looking for any indication of how holiday sales are trending and how promotional the season is shaping up to be.

STOCK PERFORMANCE: Shares fell 3 percent during the quarter beginning Aug. 3