Home Depot’s Market Performance Shows Mixed Signals Ahead
Valued at a market cap of $387.9 billion, The Home Depot, Inc. (HD) operates as a leading home improvement retailer. The Atlanta-based company provides a wide array of branded and proprietary home improvement products, including building materials, lawn and garden supplies, decor items, and related services. Home Depot primarily serves three customer segments: Do-It-Yourself (DIY), Do-It-For-Me (DIFM), and Professional Customers.
As a company in the “mega-cap” stock category, defined by valuations exceeding $200 billion, Home Depot holds a prominent position among the largest home improvement retailers globally. With over 2,300 stores located across the United States, Canada, and Mexico, it remains a significant player in the market.
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However, Home Depot has recently shown some weaknesses in its stock performance. The company’s shares have dropped 11.2% since reaching a 52-week high of $439.37 on November 26, 2024. Additionally, the stock has seen an 8.6% decline over the past three months, falling short of the broader Consumer Discretionary Select Sector SPDR Fund’s (XLY) 3.5% decrease during the same period.
Over the past 52 weeks, Home Depot has gained only 3.9%, significantly below the XLY’s return of 16.4%. In a shorter six-month window, HD’s shares increased by 4.6%, while XLY saw a more robust gain of 14.3%.
Recent trading data has confirmed Home Depot’s declining trend. The stock has been trading below its 50-day moving average since mid-February, though it has remained above its 200-day moving average since early August of last year.
On February 25, shares rose by 2.8% after the company reported its fourth-quarter earnings, which exceeded expectations. Home Depot’s adjusted earnings for the quarter were $3.13 per share, a year-over-year increase of 9.4%. Revenue climbed 14.1% to $39.7 billion, surpassing analyst predictions. Additionally, comparable sales increased by 0.8%, contrary to expectations of a 1.5% decline. This surge was fueled by rising consumer engagement in home improvement spending, despite ongoing macroeconomic concerns and high-interest rates.
Looking toward fiscal 2025, Home Depot projects total sales growth of around 2.8% and comparable sales growth of approximately 1%. The company also plans to open 13 new stores. However, the adjusted earnings per share (EPS) is anticipated to decline by about 2% compared to the previous year.
While Home Depot has underperformed against its rival Lowe’s Companies, Inc. (LOW), which has seen a 4.3% rise over the past year, it has still surpassed LOW’s 1.2% decline over the previous six months.
Despite recent fluctuations, analysts maintain a positive outlook on Home Depot’s future. The stock holds a consensus rating of “Strong Buy” among the 36 analysts monitoring it, with a mean price target of $436.74, indicating a potential premium of 11.9% over its current trading levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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