On Tuesday, February 20th, before market open, Home Depot (NYSE:HD) is expected to reveal its Q4 results. Investors are keenly focused on the company’s sales and, most crucially, its guidance in light of anticipated near-term challenges.

The consensus EPS Estimate is $2.77, reflecting a 15.9% year-over-year decrease, while the consensus Revenue Estimate is $34.67B, a 3.2% year-over-year decrease.

It seems that the home improvement sector is facing some headwinds. Oppenheimer, for instance, has turned cautious on the sector, downgrading both Home Depot (HD) and Lowe’s Companies (LOW).

The concerns of the analysts at Oppenheimer seem to be centered around the lukewarm prospect of initial 2024 guidance from HD and LOW. According to analyst Brian Nagel and team, investors eyeing the budding sector growth are likely to find better entry points in the ensuing weeks and months.

Adding to the conundrum is the persistent issue of inflation, which could potentially dissuade customers from their spending spree. This is all the more noteworthy as inflation continues to hover around 3% as evidenced by January figures.

Furthermore, the recent shipping disruption in the Red Sea due to geopolitical tensions has resulted in inflated shipping costs and delays for suppliers, which might impact retailers.

However, despite these challenges, Jefferies analyst Jonathan Matuszewski seems hopeful about Home Depot’s resilience to the recent disruption, thanks to its heavy reliance on domestic sourcing.

Providing a differing perspective, SA contributor Oliver Rodzianko, acknowledges the risks associated with Home Depot (HD), such as a weak balance sheet and relatively poor valuation. Nonetheless, he views Home Depot (HD) as a valuable portfolio diversifier.

In contrast to the caution of Oppenheimer, Piper Sandler has emerged with a more optimistic outlook. The firm upgraded Home Depot (HD) to Overweight, reasoning that Home Depot has been nurturing an ecosystem for their professional clientele which is expected to yield significant sales benefits in 2024.

It is worth noting that in its Q3 results announced in November, the company surpassed both top and bottom line estimates.

Over the last 1 year, HD has exceeded EPS estimates 100% of the time and revenue estimates 100% of the time.

In the last 3 months, EPS estimates garnered 1 upward revision and 26 downward revisions. Meanwhile, revenue estimates saw 6 upward revisions and 21 downward revisions.