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Home Depot, Kohl's earnings — What to know in markets Tuesday

Heidi Chung
Reporter

The focus on Tuesday will be on retailers Home Depot (HD) and Kohl’s (KSS) when they report quarterly results.

Home improvement giant Home Depot is largely expected to report third quarter earnings and sales in line with analysts’ expectations ahead of the open bell. Analysts expect Home Depot to report adjusted earnings of $2.53 per share on $27.52 billion in revenue, according to Bloomberg estimates. Same-store sales, a key metric for retailers, is estimated to have jumped 4.7% during the quarter.

Additional commentary from management regarding tariffs will be closely monitored. Last quarter, Home Depot lowered its guidance and cited continued lumber price deflation and tariff concerns as reasons for the bleaker-than-expected outlook. Despite the mixed second quarter and lowered guidance, shares rose on the results August 20.

Bank of America Merrill Lynch analysts noted that data from the Bureau of Labor Statistics revealed that lumber prices stabilized during the third quarter. Specifically, softwood lumber price deflation improved from -21% in the second quarter to -7% in the third quarter.

Shares of Home Depot have been on fire this year and hit an all-time high of $238.99 on October 21. The stock closed within one penny from those record levels at the end of Monday’s trading session.

A Kohl's store in Jersey City. (Photo by Jennifer Graylock/Getty Images for Kohl's)

Meanwhile, Kohl’s will release earnings amid continued challenges for department stores. Kohl’s stock has been struggling to find its footing this year and has been significantly underperforming its peers and the broader market. Kohl’s stock tumbled 8% so far in 2019, while the retail ETF, XRT, rose 10% and the S&P 500 (^GSPC) jumped 26% in the same time period.

Analysts polled by Bloomberg expect Kohl’s to report adjusted earnings of 86 cents per share on $4.40 billion in revenue during its third quarter. After reporting a same-store sales decline of 2.9% in the second quarter, same-store sales are estimated to have risen 0.6% during Q3. Like its peers, e-commerce will have likely played a valuable role for Kohl’s. However, gross margins are expected to have declined 35 basis points due to the retailer’s efforts to keep inventory under control.

Other notable earnings reports scheduled for Tuesday include TJX Companies (TJX) and Urban Outfitters (URBN).

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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