With the heart of retail earnings season on the horizon, one investor has laid out expectations for Home Depot Inc (NYSE: NYSE:HD), which is set to kick off a big week for the retailers before the market opens on Tuesday.
What Happened: Aureus Asset Management's Karen Firestone isn't expecting a blowout quarter, but she thinks Home Depot has some things going for it heading into the report.
"It's going to be interesting because this is obviously a housing-related stock and its consumer and we know that there are higher interest rates, but most of Home Depot's business is about maintenance," Firestone said Monday on CNBC's "Fast Money Halftime Report."
Homebuilder sentiment has turned negative for the first time since the start of the COVID-19 pandemic. Home Depot's business doesn't focus on supplying materials for new homes, instead, it's about maintaining existing homes and making improvements, she explained.
Related Link: Pro Traders On How To Play Home Depot, Target (NYSE:TGT) And This Tech Major
The stock also has a valuation reset working for it ahead of earnings. After falling more than 30% from its peak, Home Depot stock is trading around 18 times earnings, which is low relative to where it has traded historically, Firestone noted.
"So we think, even if they don't really knock it out of the park with great guidance, that the market is gonna look forward to what we see as potentially interest rates having peaked on the 10-year," Firestone said. "And that the market for maintenance and do-it-yourself is still growing and they're still gaining market share."
Home Depot is scheduled to report its second-quarter financial results Tuesday morning. The company is expected to earn $4.95 per share on quarterly revenue of $43.4 billion, according to Benzinga Pro.
HD Price Action: Home Depot has a 52-week high of $420.61 and a 52-week low of $264.51.
The stock was down 0.38% at $313.68 at time of publication Monday afternoon.
Photo: Courtesy of Home Depot.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read at Benzinga