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The Home Depot largely stalled out in the second quarter

  • 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.

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