Home Depot Stock Falls With Earnings Due; Lumber Stocks Rise Amid Soaring Prices

Investors will get a look at both ends of the lumber supply chain next week as lumber prices soar. On the consumer end, Home Depot (HD) and Lowe’s (LOW) tee up to report earnings. On the production side, lumber stocks Louisiana-Pacific (LPZ) and Boise Cascade (BCC) are also on tap amid soaring lumber prices. Home Depot stock fell Friday.

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Lumber prices have swung wild in the past two years and are now rebounding. Current prices are about three-times their pre-pandemic levels, but  still more than 20% below their record high from May last year. Current lumber prices add nearly $19,000 to the price of a newly built home, vs. pre-pandemic costs, according to National Association of Home Builders estimates.

Home Depot Earnings

Estimates: Wall Street expects Home Depot earnings to grow 20% to $3.18 per share. Revenue for the Dow Jones home improvement giant is seen growing 8% to $34.88 billion, according to FactSet. Same-store sales are seen up 5% vs. a 24.5% gain a year ago and 6% the prior quarter, FactSet shows.

Results: Check back early Tuesday.

Outlook: Analysts expect full-year 2023 earnings to grow 5% to $16.25, FactSet said.

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Home Depot Stock

Shares of Home Depot edged down 0.3% to 346.87 in Friday’s stock market trading, sending the stock below its 40-week moving average. Home Depot stock has almost entirely erased double-digit gains from its latest breakout. There is no new buy point, as the stock works to form a bottom to its consolidation.

The relative strength line for HD stock is lagging. That strength indicator for the home improvement giant rallied for much of 2021.

A rising RS line, the blue line in the chart shown, means a stock is outperforming the S&P 500 index.

Lowe’s Stock, Lumber Stocks

• Early Wednesday, Lowe’s should see a 29% EPS increase to $1.71 on a 3% sales gain to $20.925 billion. Analysts target same-store sales growth slowing to 3% vs. a 28.6% gain a year ago and 2.2% the prior quarter.
• Early Tuesday, Louisiana-Pacific should deliver a 0.9% EPS decline to $1.99 despite a 6% revenue gain to $912.7 million.
• Late Tuesday, Boise Cascade is likely to see a 32% EPS gain to $2.32 on an 7% sales increase to $1.579 billion.

Like Home Depot stock, Lowe’s shares eased Friday. The stock slipped 0.3%, and has returned most gains from its latest breakout. Louisiana-Pacific stock gained 1.7% 69.13. LPX stock is below the 10-week line and working to start the right side of a base. Boise-Cascade stock rose 1.1% to 82.56, well above the 10-week line. BCC stock is extended from a 71.90 cup-with-handle buy point, meaning shares are not in buy range. The rising RS line for Boise-Cascade made a fresh high Friday.

Louisiana-Pacific and Boise Cascade produce engineered wood products and plywood products for the home construction and building markets. In this young year, lumber stocks are outperforming home improvement retailers as lumber prices soar.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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