Home Depot shares gain the most in 34 weeks on Tuesday, second-quarter earnings top estimates, full-year sales forecast revised down

Home Depot’s second-quarter revenue, reported on Tuesday, fell short of Wall Street estimates, while the company revised down its full-year sales forecast due to concerns that US-China trade frictions could hamper consumer spending. However, quarterly earnings exceeded market expectations.

Home Depot shares closed higher for a fourth consecutive trading session in New York on Tuesday. It has also been the sharpest daily surge since December 26th 2018. The stock went up 4.40% ($9.14) to $217.09, after touching an intraday high at $217.85, or a price level not seen since July 30th ($218.59).

Shares of Home Depot Inc have risen 26.35% so far in 2019 compared with a 15.70% gain for the benchmark index, S&P 500 (SPX).

In 2018, Home Depot’s stock went down 9.34%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

Sales at Home Depot stores, which are open for at least 12 months, surged 3% year-on-year during the quarter ended on August 4th, while missing the median analyst estimate of a 3.5% growth.

The number of customer transactions remained almost unchanged at 455.5 million during the past quarter from a year ago, while the average ticket value reportedly increased 1.7% to $67.31.

At the same time, Home Depot’s revenue grew 1.2% year-on-year to $30.84 billion during the second quarter ended on August 4th. In comparison, analysts on average had expected revenue of $30.99 billion.

Meanwhile, net income attributable to shareholders went down to $3.48 billion ($3.17 per share) during the fiscal second quarter from $3.51 billion ($3.05 per share) in the year-ago period. The median forecast by analysts had pointed to earnings of $3.08 per share.

“Today we are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs,” Home Depots Chief Executive Officer Craig Menear, said in a statement, cited by CNBC.

Home Depot now forecasts a 4% growth in its comparable sales during fiscal year 2019, or a downward revision from a 5% growth expected previously.

The company now projects a full-year revenue growth of 2.3%, also revised down from a 3.3% growth expected earlier.

Analyst stock price forecast and recommendation

According to CNN Money, the 28 analysts, offering 12-month forecasts regarding Home Depot’s stock price, have a median target of $215.00, with a high estimate of $242.00 and a low estimate of $180.00. The median estimate represents a 0.96% downside compared to the closing price of $217.09 on August 20th.

The same media also reported that at least 17 out of 32 surveyed investment analysts had rated Home Depot’s stock as “Buy”, while 11 – as “Hold”.


TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action, Binary Options and Social Trading.