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Can Home Depot's (HD) Q3 Earnings Maintain Robust Trend?

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The Home Depot, Inc. (HD - Free Report) is slated to report third-quarter fiscal 2016 results on Nov 15. Last quarter, the company delivered a positive earnings surprise of 0.5%, thus retaining its four-year-long trend of posting earnings beat. In the trailing four quarters, the company has outperformed estimates with an average beat of 4.2%. Let’s see how things are shaping up for this announcement.

HOME DEPOT Price and EPS Surprise

HOME DEPOT Price and EPS Surprise | HOME DEPOT Quote

Factors Influencing This Quarter

Persistent housing market recovery, focus on improving customer experience, efforts to develop its e-commerce network and solid execution are the reasons behind Home Depot’s splendid historic performance. These factors also encouraged management to raise its earnings outlook for fiscal 2016 with its last reported quarterly results.

However, Home Depot faces intense competition from specialty and mass retailers, which along with a soft economic recovery, may prove to be a deterrent by pushing back home improvement projects. Also, the company’s significant exposure to international markets makes it vulnerable to adverse currency fluctuations, posing a concern. Thus, we are not sure if this home improvement retailer can sustain its spectacular trend this time around.

Earnings Whispers

Our proven model does not conclusively show that Home Depot is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Home Depot currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Home Depot carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Hibbett Sports Inc. (HIBB - Free Report) , with a Zacks Rank #2 (Buy), is expected to report earnings on Nov 18 and currently has an Earnings ESP of +4.00%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Michael Kors Holdings Limited (KORS - Free Report) , with a Zacks Rank #3 (Hold), is scheduled to release earnings on Nov 10 and has an Earnings ESP of +1.14%.

Cott Corporation (COT - Free Report) , with a Zacks Rank #3, is scheduled to release earnings on Nov 10 and has an Earnings ESP of +16.67%.

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