Home Depot’s (HD) latest results were a mixed bag, but investors didn’t seem too rattled. The retailer posted adjusted earnings of $4.68 a share, just under the $4.72 analysts expected. Still, the stock actually jumped about 4% in pre-market trading, showing investors were more interested in what comes next than the quarter that just ended.
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CFO Richard McPhail pointed out that July comps rose 3.3%, the best monthly performance so far this year. “That would be the best monthly comp of the year,” D.A. Davidson’s Michael Baker said in a note, underlining that momentum was building even after a slow spring.
Home Depot Revenue Falls Short of Estimates
Net sales came in at $45.3 billion, up 4.9% from last year but still shy of the $45.4 billion consensus. Same-store sales increased 1%, just below forecasts of 1.2%. Moreover, U.S. comps were up 1.4%, making this the third straight quarter of growth.
CEO Ted Decker told Reuters that shoppers are shifting toward smaller projects, favoring do-it-yourself jobs over large renovations. That trend also showed up in the numbers: visits to Home Depot stores fell 2.2% year over year, according to Placer.ai data.
Home Depot Sticks with Annual Targets
Despite the soft quarter, management stuck to its full-year targets: about 1% same-store sales growth and a 2% drop in adjusted EPS. That steady outlook helped lift shares, with investors betting the worst might be behind.
Bernstein analyst Zhihan Ma described the earnings and revenue miss as “as expected” and argued that markets are already focused on interest-rate cuts. “We expect the market to start pricing in a recovery way ahead of any actual improvement,” Ma wrote in a research note.
Analysts Track Housing and Pro Growth
Analysts also highlighted housing as a swing factor. Telsey Advisory’s Joseph Feldman said that homeowners may soon warm up to projects again, thanks to strong home equity values, which are up more than 50% since 2019. Home equity loans are also climbing, which could give households more firepower for remodeling.
Home Depot’s acquisitions of SRS Distribution and GMS (GMS) should boost its Pro contractor business. Investors will be watching for details on how these deals strengthen the company’s reach in bigger, more complex projects.
Investors Watch Share Repurchases
Capital allocation is still a key focus. While no new repurchase announcements were made, investors expect management to highlight share buybacks and dividends as ways to keep supporting EPS. With cash flows steady and the guidance intact, buybacks could be a quiet driver for shareholder returns in the second half of the year.
Is Home Depot a Good Stock to Buy?
According to TipRanks, Home Depot currently holds a Strong Buy consensus. Out of 25 analyst ratings in the past three months, there are 19 Buys, six Holds, and zero Sells.
The average 12-month HD price target sits at $430.68, representing a potential 4.94% upside from the latest price of $410.39.
