EARNINGS, RETAIL, EARNINGS ANNOUNCEMENTS, HOME DEPOT INC, LOWE'S COMPANIES INC, SEARS HOLDINGS CORP, SQUAWK BOX U.S., MATTHEW J. BELVEDERE, BUSINESS NEWS

CNBC.com | Tuesday, 20 Aug 2013 | 7:11 AM ET

A recovery in the U.S. housing market helped Home Depot beat quarterly profit and sales estimates, prompting the world's largest home improvement chain to raise its outlook for the fiscal year.

The results, which came just weeks after data showed that U.S. home prices rose in May, provided more evidence that the housing market was healing after years of weakness.

"I know there's been a debate lately about the strength of the housing market," Brian Nagel, senior equity research analyst at Oppenheimer & Co., told CNBC's "Squawk Box" on Tuesday. "I think the housing market is recovering quite well here. And I think Home Depot is capitalizing quite well."

Net earnings rose to $1.8 billion, or $1.24 a share in the second quarter ended Aug. 4 from $1.53 billion, or $1.01 a share, a year earlier.

Analysts on average were expecting a profit of $1.21 a share, according to Thomson Reuters.

Sales rose 9.5 percent to $22.5 billion, topping the analysts' average estimate of $21.8 billion.

Comparable store sales for the second quarter were up 10.7 percent, and comp sales for U.S. stores were up 11.4 percent. Nagel said he's focusing on these same store sales numbers because they're "very much a positive surprise" on the upside.

Home Depot also raised its full-year guidance to $3.60 a share from its previous estimate of $3.52 a share. That compared with analysts' expectations of $3.64 a share. The company also raised its full-year global same-store sales guidance to up 6 percent from up 4 percent.

Home Depot shares were higher in premarket trading following the results.

"I still view Home Depot shares as inexpensive," Nagel said. "I think if we're having this conversation two years from now, we're going to be talking about a much higher level of earnings for Home Depot as they continue to recover."

Rival Lowe's is set to report earnings before the opening bell on Wednesday. Analysts will be looking for an update on Lowe's plans to expand in California by buying Sears spinoff Orchard Supply Hardware Stores for about $205 million.