Analyst: Home Depot's Q3 Proves The Home Improvement Market Remains Strong

Many investors had legitimate concerns that the home improvement market is showing signs of slowing down after years of strong growth. According to Oppenheimer's Brian Nagel, Home Depot Inc (NYSE: HD)'s third-quarter report on Tuesday proved this to be far from the case.

Speaking as a guest on CNBC's "Squawk Box," Nagel said that Home Depot's strong results are a function of strong demand for home improvement at a macro level and are also due to the company's strong management team that is running a solid business.

Trump Presidency

Nagel believes Home Depot's momentum carried into the third quarter, but the key question on everyone's mind is how will the do-it-yourself home improvement retailer perform under a Donald Trump presidency.

Nagel continued that if personal tax rates drop, then the consumer will obviously be left with some extra cash in their pockets. Meanwhile, despite a recent rise in mortgage rates, the analyst believes rates are still very low from a historical perspective and need to rise substantially higher before it becomes a significant concern.

Nagel did, however, add that the more important factor to consider is the employment rate.

Home Depot Versus Loews

Home Depot's closest rival, Lowe's Companies, Inc. (NYSE: LOW) will report its earnings on Wednesday.

Nagel noted that Home Depot reported a 5.9 percent comp gain in U.S. stores, and typically Lowe's comps 1 to 2 percentage points below Home Depot. Accordingly, the analyst is looking for Lowe's report to be "not quite as good" as Home Depot's and should generate a comps of around 4 percent.

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