Home Depot Stock: Earnings Miss 

Home Depot (NYSE:HD) reported weaker-than-expected earnings for the latest quarter, as consumers remained hesitant about major home improvement projects due to elevated interest rates and economic uncertainty. The company generated revenue of $43.18 billion, falling short of the predicted $43.79 billion. Adjusted earnings per share reached $4.67, exceeding the estimated $4.52.

Same-store sales declined by 3.3%, surpassing the projected 2.39% decrease, marking Home Depot’s seventh consecutive quarter of negative sales growth. U.S. same-store sales fell by 3.6%. Both customer visits and the average purchase amount decreased by 1.8% and 1.3%, respectively.

Market Reactions and Future Outlook

These results follow a disappointing quarter from Trex (NYSE:TREX), which had a negative impact on its stock. UBS analyst Michael Lasser pointed out that anticipated interest rate reductions could further delay consumer purchases, as indicated by current data. Home Depot CEO Ted Decker acknowledged the strain on consumer demand due to high interest rates and economic uncertainty.

However, interest rate cuts, expected to begin in September, could potentially contribute to a market recovery. Joe Feldman of Telsey Advisory Group cautioned that any improvement might not be immediate. Home Depot has adjusted its fiscal 2024 guidance, now projecting total sales to increase by 2.5% to 3.5% year-over-year, up from a previous estimate of 1%. Comparable sales are expected to decline between 3% and 4%, worse than the 1% drop initially forecasted.

Industry Insights and Strategic Moves

Whirlpool (NYSE:WHR) CEO Marc Bitzer indicated that multiple rate cuts might be necessary to revitalize the housing market. Meanwhile, Yahoo Finance reported a decrease in mortgage rates to their lowest levels since early February, following the Federal Reserve’s signals for a September rate cut. Rival Lowe’s (NYSE:LOW), with a larger DIY customer base, will report earnings on August 20.

Home Depot’s recent $18.25 billion acquisition of , completed ahead of schedule on June 18, is viewed as a positive move. Bank of America analyst Robert Ohmes highlighted potential opportunities with the Pro Ecosystem, which is expected to expand to 17 markets by the end of 2024. The acquisition is projected to add nearly $6.4 billion in incremental sales in fiscal 2024.