On Tuesday, Stifel, a financial services firm, maintained its Hold rating on Home Depot (NYSE:HD) stock while affirming a price target of $380.00. The firm highlighted Home Depot's second-quarter earnings per share (EPS) of $4.60, which surpassed Stifel's estimate of $4.35, despite a notable decline in comparable sales of -3.3%.
The drop in domestic comparable sales was -3.6%, slightly steeper than the anticipated -1.9%. The company also experienced a $0.14 benefit from below-the-line (BTL) items relative to the estimates.
Home Depot's updated guidance for the fiscal year 2024 indicates a weaker underlying performance, with comparable sales expected to fall between -4% and -3%, a downward revision from the previous -1% forecast. This new projection is significantly below Stifel's estimate of -1.2%. The company's Strategic Retail Solutions (SRS) initiative is projected to add $6.4 billion in revenue.
Stifel will review its EPS estimate of $14.94 for Home Depot, which is at the upper end of the company's guided range of $14.66 to $14.96, excluding a $0.15 impact from incremental amortization.
Given the softer underlying revenue performance and indications that sales are not on track to meet the company's full-year 2024 guidance, Stifel anticipates that Home Depot's shares will trade lower this morning. The firm also pointed to increased scrutiny regarding the prospects for the magnitude and pace of a fiscal year 2025 recovery.
Home Depot is scheduled to hold a conference call at 9 AM EDT to discuss these updates further. Investors and analysts will be looking for additional insights into the company's performance and strategies moving forward.
In other recent news, Home Depot has made significant adjustments to its annual earnings outlook due to a decrease in consumer spending on home improvement projects. The company now expects diluted earnings per share to decrease between 2% and 4%, and annual comparable sales to fall between 3% and 4%.
Despite these challenges, Home Depot raised its total sales forecast to a range of 2.5% to 3.5% and anticipates the acquisition of SRS Distribution to close in the second half of the year, adding approximately $6.4 billion.
Analysts from Truist Securities and Jefferies have revised their price targets for Home Depot, while maintaining their ratings. Stifel also adjusted its price target for Home Depot, setting it at $380, taking into account the impact of the SRS acquisition.
These recent developments underline the changing dynamics in the home improvement market and the strategic moves Home Depot is making to navigate this environment.
InvestingPro Insights
Home Depot (NYSE:HD) has demonstrated a strong commitment to shareholder returns, having raised its dividend for 14 consecutive years and maintained dividend payments for 38 consecutive years. As of the last twelve months as of Q1 2025, Home Depot boasts a market capitalization of $342.91 billion and trades at a Price/Earnings (P/E) ratio of 23.03, reflecting a stable investment profile. The company's revenue for the same period stands at $151.83 billion, with a gross profit margin of 33.48%, indicating a solid ability to convert sales into profit.
InvestingPro Tips highlight Home Depot as a prominent player in the Specialty Retail industry, with a moderate level of debt and a historical track record of profitability. Analysts predict the company will remain profitable this year, despite recent downward revisions in earnings estimates for the upcoming period by 15 analysts. Home Depot's long-term performance is also notable, with a high return over the last decade. For investors seeking additional insights, InvestingPro offers numerous tips on Home Depot, which can be found at https://www.investing.com/pro/HD.
It's worth mentioning that Home Depot's dividend yield as of 2024 stands at 2.6%, with a dividend growth rate of 7.66% over the last twelve months, signaling the company's commitment to returning value to shareholders. While the firm faces near-term challenges with expected declines in comparable sales, the long-term outlook remains bolstered by its consistent dividend payments and overall financial health.
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