S&P 500 home improvement retail giant Home Depot maintained 2025 guidance but reported slightly worse-than-expected quarterly earnings before the stock market open Tuesday.
Home Depot reported early Tuesday that adjusted Q2 EPS increased less than 1% to $4.68 with sales rising 4.8% vs. a year earlier to $45.277 billion. Analysts had expected earnings of $4.72 per share with revenue at $45.412 billion, according to FactSet. Comparable sales for the second quarter increased 1%, slightly missing views. U.S. comparable sales advanced 1.4%.
"The momentum that began in the back half of last year continued throughout the first half as customers engaged more broadly in smaller home improvement projects," Home Depot CEO Ted Decker said Tuesday in the earnings release.
Separately, CFO Richard McPhail told Bloomberg that Home Depot is "seeing larger projects remain on hold as rates remain elevated and economic uncertainty persists."
However, "We continue to grow market share," Decker added.
The S&P 500 home improvement retailer also reaffirmed its 2025 guidance on Tuesday, sticking to its February targets for adjusted earnings to fall 2% to $14.94 in 2025. Analysts have forecast earnings of $14.99 per share. The S&P 500 company expects 2.8% sales growth, or $163.98 billion. Comparable-store sales should rise about 1%, Home Depot said Tuesday.
Home Depot Stock
Home Depot stock rose 3.2% to 407.20 during Tuesday's stock market, after falling nearly 1.2% on Monday. Entering Wednesday's stock market, the S&P 500 component is up 10.8% in August, but Home Depot shares are only up 4.6% in the 2025 stock market.
HD stock may be starting work on a handle to a consolidation going back to the end of November.
Morgan Stanley analyst Simeon Gutman wrote Tuesday that the most important takeaway of the Q2 release is that it is the "third consecutive positive U.S. comp following 8 quarters of declines."
"We think this reflects the housing market bottoming, the Covid reversion process coming to an end, and HD's internal efforts around Pro and DIY. While the magnitude of the turn is not spectacular, this is understood and priced into the stock," Gutman wrote.
DA Davidson analysts early Tuesday maintained a buy rating on Home Depot with a 450 price target. The firm wrote Tuesday that the S&P 500 component's Q2 comparable-sales were "about in line," but that the trends "improved greatly" throughout the quarter.
On Monday, Stifel analysts raised their Home Depot stock price target to 432 from 425 and kept a buy rating on the shares. The analysts noted that Q2 trends have been "mixed," but excitement over easing interest rates has been driving outperformance in the shares over the past month and this strength has pushed relative valuation "back to levels we believe more appropriately values the medium-term prospects and long-term advantages."
S&P 500: All Eyes On Jackson Hole
Along with Home Depot, Lowe's topped views before the stock market open Wednesday, though it gave mixed guidance. It also reported it will buy interior building products distributor Foundation Building Materials for $8.8 billion cash.
While several retailers report earnings this week, the economic highlight of the week is expected to be Federal Reserve Chairman Jerome Powell's annual Jackson Hole speech Friday morning.
Powell in prior years has used the event to signal key policy changes. Markets will be looking to see if he confirms market expectations for a possible a Fed rate cut in September.
Probability of a rate cut at the Fed's Sept. 17 meeting stand at around 83%, according to the CME FedWatch tracker of 30-day Fed funds futures prices. That's down from a virtual lock before some hot inflation and economic data this past week. Expectations for cuts in at the Fed's October and December meetings stood in the 80% to 90% range.
Investors can also keep tabs on the Leaderboard, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
Home Depot stock has a 71 Composite Rating out of a best-possible 99. The S&P 500 stock also has a 63 Relative Strength Rating and a 55 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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