S&P 500 home improvement retail giant Home Depot reported slightly worse-than-expected first-quarter profit early Tuesday while also maintaining 2025 guidance. Peer Lowe's is on deck with first-quarter earnings and revenue due Wednesday.
Analysts and investors looking for insight into inventory levels and commentary on President Donald Trump's tariff policies.
Home Depot Earnings
Home Depot said Tuesday that Q1 EPS dipped 2% to $3.56 with sales rising 9.4% vs. a year earlier to $39.856 billion. Analysts had expected earnings of $3.60 with revenue at $39.32 billion, according to FactSet. Comparable sales for the first quarter of fiscal 2025 decreased 0.3% while U.S. comparable sales increased 0.2%.
"Our first quarter results were in line with our expectations as we saw continued customer engagement across smaller projects and in our spring events," Chief Executive Ted Decker said in the earnings release.
"We feel great about our store readiness and product assortment as spring continues to break across the country," Decker added.
Lowe's follows up early Wednesday with its own first-quarter results. The analyst consensus pegs the S&P 500 giant's Q1 earnings declining 6% to $2.88 per share with sales off 2% to $20.94 billion. The sharp consensus has Lowe's revenue totaling $20.88 billion, according to FactSet. The sharp consensus is a narrower consensus tool that tends to be a bit more accurate.
S&P 500's Home Depot advanced early, hitting a daily high of 389.75, before closing down 0.6% to 377.22 during Tuesday's stock market action. Meanwhile, Lowe's stock fell 1.4% to 232.09 Tuesday. The S&P 500 stock added a fraction on Monday.
Both S&P 500 components have reclaimed the 50-day moving average but are still below their 200-day moving averages. Home Depot, also a Dow Jones member, could test its 200-day line Tuesday.
Home Depot stock is up about 5.2% in May while Lowe's has advanced 4.9% in the month's stock market action.
The Outlook For Home Depot, Lowe's
Morgan Stanley analyst Simeon Gutman wrote on May 12 that the stock market expects modest misses for both S&P 500 stocks but that "all eyes are on 2QTD (second quarter to date) and the path for '25."
"The biggest risk to our HD/LOW call is more systemic macro weakness, which could depress home prices and home improvement activity," Gutman wrote.
"Tariffs continue to create significant consumer uncertainty, but the recent reduction of China tariffs to 30% from 145% for a 90-day period could benefit the Home Improvement sector, as 1) demand may rise on improving consumer sentiment, and 2) this level is still meaningfully higher than it was entering '24, which would drive ticket growth given the sector's solid pricing power," the analyst added.
On Tuesday, Home Depot reiterated its 2025 expectations. In February, Home Depot outlined expectations for adjusted earnings to fall 2% to $14.94 in 2025. Analysts 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.
Meanwhile, Lowe's in February said it expects total sales of $83.5 billion to $84.5 billion in 2025 with EPS at $12.15-$12.40. Comparable-store sales should be flat to up 1%.
S&P 500: U.S.-China Trade And Shipments
Last week, Trump slashed 145% China tariffs to 30%, likely spurring at least a partial shipping revival after shipments from China to the U.S. almost completely ceased in recent weeks.
The tariff cuts and shipping resumption may have come just in time to avoid shortages at retailers, which likely have been starting to draw down inventories. Reuters reported Wednesday that U.S. bookings for cargo ships from China have jumped around 300% in the aftermath of the announcement of the U.S.-China trade deal, according to container-tracking software provider Vizion.
President Trump's China Tariff Cuts Revive Shipping Sector, But Uncertainty Remains
Meanwhile, global logistics firm Flexport reported this week on the U.S.-China trade agreement, saying demand from China to the U.S. is "expected to surge."
"Given existing backlogs and the lead-up to peak season, we'll likely see a major surge in shipping volumes from China to the United States. Some carriers have already announced continuations of suspended service loops," Flexport reported.
Ocean Freight Bookings Surging
Flexport Chief Executive Ryan Peterson added on social media site X Friday that ocean freight bookings from China to the U.S. are up 275% this week compared to last week.
However, 25% tariffs on steel and aluminum, as well as 25% tariffs on Canadian lumber, are still in place, a big deal for home improvement and construction generally.
Among retailers, Walmart CFO John David Rainey told CNBC on Thursday that tariffs are "still too high," adding that consumers will start seeing higher prices later this month. The comment came as the Dow Jones retail giant reported better-than-expected Q1 earnings. Target earnings are due Wednesday.
S&P 500 component Home Depot has a 41 Composite Rating out of a best-possible 99. The stock also has a 34 Relative Strength Rating and a 73 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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