Home Depot and Lowe's on Track for Record Sales Growth Despite Pandemic

Strategic Insights -

Consumers are transforming their living spaces in response to the COVID-19 pandemic, driving a surge in home improvement spending. According to Bank of America, credit-card spending data shows a continued increase in home improvement spending, with Home Depot and Lowe's set to report record second quarter sales growth. The bank has raised its earnings estimates for both companies, expecting same-store sales growth of 15% for Lowe's and 11% for Home Depot. Bank of America expects the surge in home improvement spending to continue, driven by pent-up demand, increased demand for home improvement projects, and the pandemic pulling forward demand for new home projects.

Key Takeaways:

  • Bank of America's credit-card spending data shows a continued increase in home improvement spending throughout the second quarter.
  • The spending boom is driven by consumers transforming their living spaces in response to the COVID-19 pandemic.
  • Home Depot and Lowe's are set to report record second quarter sales growth, with Bank of America expecting same-store sales growth of 15% for Lowe's and 11% for Home Depot.
  • The bank has raised its earnings estimates for both companies, with the expectation that the surge in home improvement spending will continue.
  • Bank of America cites three main reasons for the surge in home improvement spending: pent-up demand, increased demand for home improvement projects, and the pandemic pulling forward demand for new home projects.
  • The bank also notes that the pulled forward demand could result in a lull in renovation activity as new home projects cool off.

Statistics:

  • Home Depot and Lowe's are expected to report record second quarter sales growth.
  • Bank of America expects same-store sales growth of 15% for Lowe's and 11% for Home Depot.
  • The bank has raised its price target for Lowe's to $176 from $170, representing potential upside of 14% from the previous close.
  • The bank has raised its price target for Home Depot to $290 from $270, representing potential upside of 3% from the previous close.
  • Credit-card spending data shows a continued increase in home improvement spending throughout the second quarter.

Sources:

  • Business Insider
  • Bank of America: https://www.businessinsider.com/stocks/hd-stock
  • Business Insider: https://markets.businessinsider.com/stocks/low-stock