Earnings Previews: Home Depot and Lowe's

Rival home improvement superstore operators Home Depot

and Lowe's

are scheduled to step into the earnings spotlight this week. The latter will report its fourth-quarter and full-year fiscal 2012 results Monday, February 25, before the markets open, followed by the former, sharing its fourth-quarter and full-year fiscal 2012 results Tuesday, February 26, before the opening bell. Both companies have benefited from the revived housing market, as both housing starts and existing home sales have improved over the past year. But some data suggests that the recovery could be slowing, or even faltering, so investors will be keeping an eye on this week's results from these two big-box retailers.

Analysts on average predict that Lowe's will report that revenue slipped less than seven percent year-over-year to $10.84 billion. And quarterly earnings of $0.23 per share are also expected. That compares to a profit of $0.29 per share in the same period of last year. But note that analysts have underestimated Lowe's EPS in all but one of the past six quarters. The earnings beat in the third quarter was by more than 14 percent. For the full year, however, analysts expect to see earnings of $1.72 per share, which would be up from $1.66 per share in the previous year. That consensus estimate, like the quarterly one, is unchanged in the past 60 days. And the consensus forecast also has revenue essentially flat year-over-year at $50.32 billion. Lowe's operates more than 1,700 stores in the United States, Canada and Mexico. This S&P 500 component has a market capitalization of more than $42 billion, was founded in 1946 and is headquartered in Mooresville, North Carolina. Robert Niblock is president, chairman and chief executive officer. During the three months that ended in January, Lowe's hired a new chief merchandising officer and said it would hire 45,000 seasonal associates ahead of the spring season. The long-term EPS growth forecast is about 16 percent, and the price-to-earnings (P/E) ratio is less than Home Depot's and the industry average. Lowe's return on equity is less than 13 percent. The analysts' mean price target, or where they expect the stock to go, represents less than three percent potential upside. That target is less than the recent 52-week high. The share price has pulled back more than five percent from that 52-week high. But shares are still trading more than 37 percent higher than six months ago. Over that time, the stock has outperformed Home Depot and the broader markets.

The consensus forecast of analysts surveyed by Thomson/First Call calls for fourth-quarter EPS of $0.64 on revenue of $17.69 billion. That would be up from $0.50 per share and $16.01 billion in sales in the year ago period. Note that the consensus EPS estimate has not changed in the past 60 days, and Home Depot's earnings have not fallen short of consensus estimates in the past eight quarters. The full-year forecast calls for earnings of $3.05 per share, which would be up about 19 percent from the previous year. That consensus estimate has ticked up from $3.04 in the past 60 days. And analysts on average expect to see revenue of $74.20 billion. That would be more than five percent higher than a year ago. This Atlanta-based company operates more than 2,200 stores in the United States, Puerto Rico, Canada and Mexico. Home Depot is also an S&P 500 component and has a market cap near $98 billion. It was founded in 1978. Francis S. Blake is now executive chairman and CEO. During the three months that ended in January, Home Depot added Samsung to its appliance line up and it acquired software company BlackLocus. The long-term EPS growth forecast is more than 16 percent. The operating margin is in line with the industry average, but the return on equity is more than 24 percent. The mean price target is about six percent higher than the current share price. That target would be a new multiyear high. Home Depot shares also have pulled back recently, more than three percent in the past week. But the share is still up about 16 percent from six months ago. Over that time, the stock has outperformed the broader markets and Wal-Mart

.