New York, NY, September 28, 2006--Goldman Sachs lowered earnings estimates for home improvement retailers Home Depot (HD : The Home Depot, Inc. and Lowe's Companies (LOW : Lowe's Companies, Inc. due to expectations of a continued deceleration in housing turnover.
Analyst Matthew Fassler lowered his 2006 earnings estimate for Home Depot to $2.95 a share from $2.98, his 2007 forecast to $3.20 a share from $3.25 and his 2008 estimate to $3.68 a share from $3.71.
For Lowe's, Fassler trimmed his 2006 forecast to $1.97 a share from $2.01, his 2007 projection to $2.18 a share from $2.28 and his 2008 estimate to $2.55 a share from $2.65.
"As housing turnover decelerates, the retail segment most closely linked to housing, home improvement retail, is, predictably, slowing along with it, even as broader consumer spending remains robust," Fassler said. "To the extent that housing turnover tends to lead sales by 6 to 9 months, and turns are still searching for a bottom, we do not expect business to bottom until the fourth quarter of 2006 to the first quarter of 2007." Home Depot's stock, a component of the Dow industrials, was last down 18 cents, or 0.5%, at $36.44, and Lowe's stock was slipping 45 cents, or 1.6%, to $28.40.
