The Home Depot advances 2% despite missing Q2 earnings, comparable sales

Home Depot sees comparable sales come in below consensus at 1% YoY.
DIY construction retailer says customers are opting for smaller projects.
Home Depot revenue and adjusted EPS were large in line with consensus, though the latter missed by a penny.
HD stock recaptures space above $396-$402 volume band.

Clay Webster FXStreet

The Home Depot (HD) stock has gained 2% in Tuesday's premarket despite the DIY construction retailer slightly missing both earnings per share (EPS). The company reported adjusted EPS of $4.68 for the second quarter, a penny below the Wall Street consensus and a penny above last year's result.

Revenue of $45.28 billion was in line with the consensus, rising nearly 5% from a year earlier. Comparable sales of 1.0% missed the 1.4% consensus, but comparable sales did rise 1.4% in the US. Management blamed foreign exchange changes (weakening US Dollar) for cutting into worldwide comparable sales by 40 basis points.

Total customer transactions fell 0.9% YoY to 446.8 million. The average receipt rose 1.2% to $90.01 over that time period. Home Depot's adjusted operating margin of 14.8% in the quarter declined from 15.3% a year ago.

"We are seeing larger projects remain on hold as rates remain elevated and economic uncertainty persists," said company CFO Richard McPhail in a statement.

For the full year, management projects that adjusted, diluted EPS will fall about 2% from 2024. It also projects that total sales will rise 2.8%, slightly below the 3.0% consensus.

The Home Depot stock forecast

The Home Depot stock is in a long consolidation phase between about $330 and $430. After dropping below the significant price range between $396 and $402 on Monday, the premarket has pushed HD stock back above. This might give bulls a chance to target resistance in the $420s and $430s from December and January.

The 200-day Simple Moving Average (SMA) provides some level of support near $383, but a break there would send HD stock down to the August 1 low at $365.75.

HD daily stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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