"We believe the market fairly reflects the fact that HD continues to outperform on the sales and EBIT [earnings before interest and taxes] lines and the greater likelihood of downside risk at LOW," Jefferies said, adding later: "Expecting HD to outperform LOW. Based on our checks, we believe Home Depot's 2Q results will continue to outperform Lowe's, despite both likely slowing sequentially against more challenging comparisons and a pull forward of demand in 1Q."
That said, as reflected by the firm's hold ratings on both stocks, Jefferies thinks the overall market environment is a headwind.
"Our checks on home improvement retail throughout the quarter indicate softer comp store sales, particularly in June, driven by: 1) the weather-related pull forward of demand in 1Q; 2) more challenging comparisons; 3) extreme temperatures/drought that reduced demand for lawn & garden products in some parts of the country; and 4) continued sluggishness in big ticket items," Jefferies said. "Vendors sound a bit more cautious on DIY [do-it-yourself]. Building materials vendors have been putting up good numbers this earnings season, but a lot of this has been attributable to improvements in new home construction. Many of these supplier comments have been more cautious around the DIY business."
The firm is in-line with consensus, expecting earnings of 97 cents a shares from Home Deport in the quarter with same-store sales seen up 2%, and it has a $48 price target on the stock, implying potential downside of more than 9% from current levels.
Check out TheStreet's quote page for Home Depot for year-to-date share performance, analyst ratings, earnings estimates and much more.
Other early reporters included
Dick's Sporting Goods
Michael Kors Holdings
The after-the-bell crew includes
Bob Evans Farms
Tuesday's economic calendar includes the National Federation of Independent Business small-business survey for July at 7:30 a.m. ET; retail sales for July at 8:30 a.m. ET; the producer price index for July at 8:30 a.m. ET; and business inventories for June at 10 a.m. ET.
(GRPN - Get Report)
tanking in late trades
after the online daily deals company beat Wall Street's profit view for the latest quarter but revenue came in light.
The Chicago-based company posted non-GAAP earnings of $53.8 million, or 8 cents a share, for the three months ended June 30 on revenue of $568.3 million. The average estimate of analysts polled by
was for a profit of 3 cents a share in the quarter on revenue of $573.1 million. Groupon sees revenue ranging from $580 million to $620 million in the third quarter.
In addition, gross billings declined on a sequential basis, falling to $1.29 billion in the second quarter from $1.35 billion in the first quarter. The stock, which went public in November 2011 at $20 per, was last quoted at $6.15, down 18.5%, on after-hours volume of 9.77 million.
Written by Michael Baron in New York.
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