Key Takeaways

• Lowe's Companies is set to report third-quarter results before the bell Tuesday, with analysts expecting sales to decline year over year.

• Lowe's and rival Home Depot have reported falling sales in recent quarters as discretionary spending has declined.

• Analysts said sales in the professional contractor market will be a key point to watch as do-it-yourself sales remain pressured by inflation.

Lowe's Cos. (LOW) is set to report third-quarter results Tuesday morning, with analysts expecting lower revenue than the same time last year despite a potential sales boost from recent hurricanes.

Analysts are slightly less bullish on Lowe's stock than its home-improvement rival Home Depot (HD), which reported earnings last week. Of the 19 analysts who cover Lowe's tracked by Visible Alpha, 10 hold "buy" ratings, eight have "holds," and one has a "sell" rating. Their average target price of $269.32 is within a few cents of Friday's close.

Lowe's stock is about 6% off the record-high $287.01 it reached last month, though also up about 21% this year.

Analysts expect Lowe's to report sales of $19.89 billion, down from $20.47 billion last year. Net income is expected to decline nearly 10% to $1.60 billion, or $2.82 per share.

What Home Depot's Earnings Could Mean for Lowe's

Analysts from Bank of America and Melius Research wrote in recent notes that Home Depot's earnings likely indicate that Lowe's will see a similar sales boost from hurricanes that impacted Southern states during the quarter.

Melius analysts raised their price target on Lowe's to $310 and said the performance of the professional contractor market—in which both Home Depot and Lowe's have worked to expand their market share—will be a "key question," as "big ticket" spending and do-it-yourself projects are likely to remain lower in the quarter.

Home Depot and Lowe's have reported lower sales in recent quarters as American consumers have focused on buying essential items and pulled back on discretionary spending like home-improvement projects and "big ticket" purchases like appliances.