House Depot (NYSE:HD) is ready to publish its earnings outcomes previous to the market open on Tuesday, with macro elements in focus because the retailer makes an attempt to keep up gross sales momentum after a pandemic-driven growth.

Analysts count on the corporate to report $3.29 in earnings per share for the fourth quarter $36B in income. The Atlanta-based retailer has overwhelmed each income and EPS estimates in each report since Might 2020 within the depths of the early pandemic. Whereas shares have risen sharply from that time amid sturdy pandemic reworking demand, shares have trended flat over the previous 12 months and stay notably under their late-2021 peak.

In 2023, the important thing considerations relating to the inventory’s trajectory embrace the potential for rising rates of interest to harm housing demand, lingering provide chain dangers, still-elevated labor prices, a basic slowdown in residence reworking post-pandemic, and elevated competitors from Lowe’s (LOW), notably in the important thing Professional section. In contrast, upside drivers embrace rebounding homebuilder sentiment and potential for the housing market to stay resilient, continued dominance within the Professional section, and the potential for higher than anticipated reworking spend amongst shoppers.

“We acknowledge lapping the pandemic power represents dangers, however we nonetheless view HD as a large-cap, retail market share chief to personal,” Citi analyst Steven Zaccone stated. “Housing market indicators are sturdy and level to ongoing power in residence enchancment, HD’s bigger positioning with execs (45% of enterprise), and up to date acquisition of HD Provide ought to insulate the retailer from vital declines on more durable comparisons, and administration’s dedication to regular opex leverage supplies readability on returning to leverage publish a multi-year funding cycle.”

He at present holds a Purchase-equivalent ranking on the inventory, in-line with the analyst consensus.

Analysts additionally broadly see upside for House Depot (HD) by way of its cost-cutting efforts and channel checks that counsel sturdy same-store gross sales. In accordance with Placer.ai, an information analytics agency monitoring foot visitors to main retailers, visits to House Depot and Lowe’s have fallen double-digits from the pandemic growth, however have stabilized close to 2019 ranges.

Per the info, foot visitors into House Depot areas slumped by a mean of 11.6% 12 months over 12 months for the months of October 2022 via January 2023. Nonetheless, visits trended solely 2.5% under 2019 ranges over the identical span.

“Though the new home-buying market is cooling off, year-over-three-year foot visitors stays near pre-pandemic ranges on account of a shift in direction of initiatives aimed toward sprucing up a present residing area,” the evaluation defined. “Demand for initiatives related to shifting drove residence enchancment foot visitors when residence gross sales had been surging, however it seems that initiatives that improve the prospect of staying in place even have the flexibility to drive visits.”

That stated, steering into 2023 is more likely to show pivotal for the inventory response on Tuesday, extra so than gross sales traits into the shut of the fiscal 12 months. Analysts will not be eager for the retailer to offer an in depth forecast. Financial institution of America analyst Eliazbeth Suzuki famous that 2022 steering included a projection of “barely constructive” comps, “flattish” EBIT margin, and “low-single digit progress” in EPS somewhat than particular figures. She doesn’t anticipate extra granular element within the upcoming report.

When it comes to forward-looking surveys, Keybanc analyst Bradley Thomas informed shoppers that “a continued slowdown in near-term progress for residence enchancment professionals” is probably going. Whereas House Depot (HD) is more likely to retain a dominant place within the Professional section, the enterprise might be uneven into 2023.

“As we have now written previously, the present pipeline of labor ought to maintain reworking traits constructive for the subsequent one to 2 quarters, which is encouraging, albeit at progress charges which can be more likely to decelerate,” Thomas wrote forward of the outcomes.

Learn extra on the week’s slate of earnings.