Home Depot (HD) reported better-than-expected Q2 earnings of $4.67 per share, beating the anticipated $4.53, and revenue of $43.17 billion, above the forecasted $42.57 billion. However, despite these strong results, the stock fell in early trading after the company lowered its full-year EPS and same-store sales outlook. The retailer's same-store sales decreased for the seventh consecutive quarter, with a 3.3% drop, worse than expected. CEO Ted Decker cited higher interest rates and economic uncertainty as factors dampening consumer demand for home improvement projects. The stock eventually recovered and ended the day up 1.2% on Tuesday.
Home Depot revised its 2024 sales growth forecast to 2.5% to 3.5%, up from the previously expected 1% growth, but now predicts a 1% to 3% decline in adjusted earnings per share. The company also anticipates a 3% to 4% drop in same-store sales for the year, with the potential for further pressure on consumer demand. Analysts noted that weather conditions and high interest rates negatively impacted home improvement demand. As reported by Harrison Miller of Investor's Business Daily, Truist, “Lowered its price target on Home Depot stock to $396 from $406 but maintained a buy rating on the shares.” At the same time, “JPMorgan lifted its price target on Home Depot stock to 400 from 377 and kept an overweight rating on the shares.” These adjustments can offer investors valuable insights into what larger firms anticipate for the company's future.
Summary
Home Depot reported strong Q2 earnings, but the stock initially fell after the company lowered its full-year outlook due to declining same-store sales and economic uncertainty. Despite these challenges, the stock eventually rose 1.2% as analysts adjusted their price targets, reflecting mixed but cautious optimism about the company's future.
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