Home Depot’s earnings are expected to decline for the first time in 3 years

Home Depot (HD) reports first-quarter financial data on Tuesday, with Dow Jones stock giving investors clues as to whether consumers are spending more money on home remodeling projects despite recession fears.


While home improvement retailers have been the winners of the Covid pandemic, more recently, they have found the edge in defensive play amid inflation fears and a global recession. In early 2023, Home Depot rebounded along with other housing-related plays as mortgage rates came in from all-time highs.

But Home Depot is a competing home improvement retailer Louie (Low) Stumbled since early February. However, stocks of home builders have risen strongly even as their current earnings are down sharply. Lowe’s reports next week.

On Friday, Baird analyst Peter Benedict lowered his price target for Dow Jones stock to 320, down from 340. Benedict maintained an “outperform” rating on the stock while focusing on seasonal sales and a “sequential slowdown in demand indicators.”

last week, Citigroup Analyst Stephen Zakon cut the company’s price target on Home Depot stock to 327 from 332. The analyst wrote that he expects same-store sales to fail in the first quarter at both Home Depot and Lowe’s. Zaccone counts on an “unfavorable onset” of spring.

Morgan Stanley (MS) Simeon Gutman wrote Thursday that Home Depot’s stock risk/return “looks modestly positive.”

“It is possible to buy HD shares at a guidance discount,” Gottman wrote, adding that there is currently uncertainty in the housing market.

“It is likely that the housing market will undergo a multi-year digestion, in which case the stock may pierce the water until price turnover stabilizes and there is a clearer path for earnings growth,” he wrote.

Shares of HD fell 0.88% to 287.90 in Monday’s market trade. Dow Jones stock fell below the 50-day and 200-day lines.

Home Depot stock: earnings

estimates: Wall Street expects Home Depot’s earnings to fall 7% to $3.80 per share in the first quarter, the first annual decline in three years. Analysts expect revenue to increase 1% to $38.31 billion. Same-store sales are expected to decline by 1.6%.

results: Check out on Tuesday morning.

In late February, Home Depot reported mixed fourth-quarter financial results. Dow Jones reported EPS of $3.30 vs. the FactSet consensus of $3.28. It reported revenue of $35.83 billion versus an expected $35.97 billion.

On a year over year basis, Home Depot’s earnings were up 2.8% and revenue was up 0.3%. This marks the second consecutive quarter of slowing profit and sales growth.

For fiscal year 2023, Dow Jones expects EPS to fall in the mid-single digits. In February, it directed flat sales and comparable sales growth. Meanwhile, the analyst consensus is that Home Depot’s earnings per share fell 5% to $15.72 per share on sales falling 1% to $156.29 billion.

“While we expect this to be a year of moderation in home improvement demand, we believe the long-term fundamentals of our market remain strong, and we are well positioned to take advantage of distinct competitive advantages to take advantage of compelling growth opportunities in our space,” said CEO Ted Dekker. to investors in February.

Dow Jones stock ranks fifth in IBD’s wholesale building products industry group. Home Depot has a composite rating of 73 out of 99. HD has a relative strength rating of 44. The EPS rating for Dow Jones stock is 88 out of 99.

Dow Jones Stock Home Depot Lowe’s competitor on deck

Lowe’s followed giant Dow Jones Home Depot late on May 23. Wall Street expects Lowe’s dividend share to drop 2% to $3.45 with revenue falling 8% to $21.68 billion.

On March 1, Lowe’s fourth-quarter earnings accelerated for the third consecutive quarter, jumping 28% to $2.28 a share on revenue rising 5.2% to $22.445 billion.

The adjusted earnings results excluded pretax transaction costs associated with the sale of the Canadian retail business, after it was offloaded to private equity firm Sycamore Partners for $400 million in cash in November. Lowe’s comparable sales fell 1.5% for the fourth quarter while US comparable sales fell 0.7%. FactSet projected steady year-over-year growth.

For fiscal year 2023, Lowe’s expects earnings to range from $13.60 to $14 per share on $88 billion to $90 billion in total sales. For the full year 2022, Lowe’s earnings were $13.76 per share on $97 billion in sales. Management expects the slow traffic to continue throughout the year. The home retailer sees comparable sales flat at 2% year-over-year.

Lowe’s shares fell 0.90% to 201.44 on Monday, falling below the 50-day and 200-day lines.

Please follow Kit Norton on Twitter @employee for more coverage.

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