ATLANTA, May 20, 2025 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $39.9 billion for the first quarter of fiscal 2025, an increase of 9.4% from the first quarter of fiscal 2024. Comparable sales for the first quarter of fiscal 2025 decreased 0.3%, and comparable sales in the U.S. increased 0.2%. For the first quarter of fiscal 2025, foreign exchange rates negatively impacted total company comparable sales by approximately 70 basis points. Net earnin ...

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Core Viewpoint - Home Depot is set to release its first-quarter earnings results, with expectations of a slight decline in earnings per share but an increase in revenue compared to the previous year [1]. Financial Performance - Analysts predict Home Depot will report earnings of $3.59 per share, down from $3.63 per share in the same quarter last year [1]. - The company is expected to report quarterly revenue of $39.14 billion, an increase from $36.42 billion a year earlier [1]. Analyst Ratings - Home Depot has exceeded revenue estimates in two consecutive quarters and six out of the last ten quarters [2]. - Recent analyst ratings include: - Wells Fargo maintains an Overweight rating, lowering the price target from $445 to $420 [8]. - Truist Securities maintains a Buy rating, raising the price target from $391 to $393 [8]. - JP Morgan maintains an Overweight rating, reducing the price target from $470 to $410 [8]. - Morgan Stanley maintains an Overweight rating, cutting the price target from $450 to $410 [8]. - Piper Sandler maintains an Overweight rating, lowering the price target from $435 to $418 [8].

Core Viewpoint - Home Depot's comparable sales are expected to slow, reflecting concerns over tariffs and declining consumer sentiment impacting the housing market [1][2] Sales Performance - Analysts predict a softening in Home Depot's comparable sales, indicating potential challenges ahead [1] - Lowe's same-store sales are also forecasted to dip, and Floor & Decor has cut its full-year sales forecast [3] Tariff Impact - Tariff policies under President Trump are causing chaos in various industries, potentially increasing housing product costs and curbing consumer spending [2] - Home products are identified as highly exposed to tariffs, with demand and pricing closely linked due to their discretionary nature [3] Economic Sentiment - Over 50% of respondents in goods-producing sectors anticipate negative impacts from tariffs, reflecting growing concerns over supply chain disruptions and rising raw material costs [4] - The ongoing uncertainty is leading businesses to delay investments and hiring plans until trade policy clarity is achieved [5] Economic Performance - The U.S. economy contracted by 0.3% in the first quarter of 2025, marking the first decline since 2022, highlighting the tangible effects of trade tensions [5]

Group 1: Company Performance Expectations - Home Depot (HD.US) is expected to report a first-quarter sales increase of 8% year-over-year, reaching $39.26 billion, while Lowe's (LOW.US) is projected to see a 2% decline in revenue to $20.95 billion [1] - Adjusted earnings per share for Home Depot are anticipated to decrease to $3.56, and for Lowe's, to $2.87 [1] - Analysts are generally optimistic, with 11 out of 13 analysts rating Home Depot as "buy" or equivalent, and 10 out of 15 analysts rating Lowe's as "buy" [1] Group 2: Analyst Insights and Market Conditions - UBS analysts do not expect any significant surprises in the first-quarter results but remain positive on the stocks due to stable demand and potential improvement in the housing market later this year [1] - Morgan Stanley analysts view these retailers as "high-quality barometers" and expect them to maintain previous annual forecasts, although they may widen guidance ranges to reflect uncertainties [2] - Concerns over consumer spending due to tariff uncertainties have led to a downgrade in same-store sales forecasts for both Home Depot and Lowe's [2] Group 3: Broader Economic Context - Walmart (WMT.US) reported solid quarterly sales but indicated that tariffs and economic volatility would lead to price increases, creating pressure on competitors like Home Depot and Lowe's [3] - Recent performance from consumer-facing companies has been weak, with several firms lowering annual forecasts amid demand fluctuations and economic uncertainty [3]

Investment Rating - The report maintains a neutral investment rating for the U.S. stock market [1] Core Insights - The U.S. stock market is experiencing a steady recovery, led by the technology sector, with the S&P 500 rising by 5.3% and the Nasdaq increasing by 7.2% [3] - Significant capital inflows have been observed, particularly in the semiconductor and automotive sectors, indicating strong investor interest [4] - Earnings expectations for the S&P 500 constituents have been slightly adjusted upwards, with traditional industries showing the most significant upward revisions [5] Summary by Sections Price Trends - The S&P 500 increased by 5.3% and the Nasdaq by 7.2% this week, with the automotive and semiconductor sectors leading the gains at +16.2% and +13.3% respectively [3] Capital Flows - Estimated capital inflows for the S&P 500 constituents reached +$25.71 billion this week, a significant increase from the previous week's +$2.99 billion [4] - The semiconductor sector saw the highest inflow at +$9.17 billion, followed by automotive at +$6.59 billion [18] Earnings Forecasts - The dynamic F12M EPS expectations for the S&P 500 were adjusted up by 0.1%, with 19 sectors seeing upward revisions, particularly real estate (+0.7%) and materials (+0.5%) [5]

Group 1: Walmart's Performance - Walmart's results showed better-than-expected comparable sales, with its domestic e-commerce business becoming profitable for the first time [1] - The 'general merchandise' category faced slight negative comps, particularly in electronics, home, and sporting goods, although there was positive momentum in toys, automotive, and kids apparel [2][3] - Walmart's ability to provide guidance amidst operational uncertainty is a positive sign for investors [1] Group 2: Target's Challenges - Target's shares have significantly underperformed, losing over 25% of their value this year, while Walmart's shares have increased by more than 8% [5] - Target is expected to report a decline in EPS by 17.2% year-over-year, with same-store sales projected to decrease by 1.7% [5] - Target's vulnerability to global trade issues is greater than Walmart's, as Walmart sources two-thirds of its merchandise domestically [6] Group 3: Home Improvement Retailers - Home Depot and Lowe's are facing challenges due to high interest rates affecting the housing market, which is impacting discretionary spending on home improvement [10][11] - Home Depot is expected to report a slight decline in EPS of 1.1% year-over-year, while Lowe's is projected to see a decline of 1.99% in comps [14][15] - The overall operating environment for home improvement retailers remains difficult, with a focus on repair and replacement rather than new projects [13] Group 4: Retail Sector Overview - The retail sector has seen a 16.7% increase in total Q1 earnings for 21 retailers in the S&P 500, with 57.1% beating EPS estimates [18] - The earnings growth for the sector is significantly influenced by Amazon, with the group outside of Amazon showing a decline in earnings despite revenue growth [20][22] - The overall earnings picture for the retail sector indicates a stabilization trend, although estimates for Q2 have been cut more than usual [35][39]

Group 1 - Home Depot is expected to report fiscal first-quarter earnings on May 20, 2025, with anticipated earnings of $3.59 per share and revenue of $39.16 billion, indicating a 1% decline in earnings year-over-year and an 8% increase in sales compared to the previous year [1] - The company's current market capitalization stands at $370 billion, with $160 billion in revenue, $22 billion in operating profit, and a net income of $15 billion over the last twelve months [2] - Historical data shows that Home Depot's stock has fallen 55% of the time after earnings announcements, with a median drop of 2.5% in one day and a maximum decline of 9% observed [1][2] Group 2 - Home Depot's business model is challenged by its reliance on global sourcing, particularly from China, Canada, and Mexico, which exposes it to trade interruptions and tariffs [2] - The company has recorded 20 earnings data points over the last five years, with 9 positive and 11 negative one-day returns, resulting in positive returns occurring roughly 45% of the time [5] - The median of the 9 positive returns is 1.7%, while the median of the 11 negative returns is -2.5% [5] Group 3 - For event-driven traders, historical patterns can provide an advantage, allowing for preparation ahead of earnings or response to post-release movements [2] - A less risky approach involves examining the correlation between short-term and medium-term returns after earnings, identifying pairs with the highest correlation for trading strategies [3] - The performance of peers may influence Home Depot's post-earnings reaction, with pricing potentially beginning prior to the earnings announcement [6]

Core Insights - Home Depot is expected to report quarterly earnings of $3.59 per share, reflecting a year-over-year decline of 1.1% [1] - Revenue projections stand at $39.33 billion, indicating an 8% increase from the same quarter last year [1] - The consensus EPS estimate has been revised 0.4% higher in the last 30 days, showing analysts' reevaluation of their initial estimates [1] Earnings Estimates and Market Performance - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock [2] - Empirical research shows a strong correlation between earnings estimate revisions and short-term stock price performance [2] Key Metrics Projections - Analysts predict the 'Number of stores - Retail' will reach 2,350, up from 2,337 a year ago [4] - The 'Number of customer transactions - Retail' is expected to be 390.80 million, compared to 386.8 million in the same quarter last year [4] - The 'Average ticket - Retail' is projected to be $91.74, an increase from $90.68 reported in the same quarter last year [5] Stock Performance - Over the past month, Home Depot shares have recorded a return of +7.8%, compared to the Zacks S&P 500 composite's +9% change [5] - Based on its Zacks Rank 3 (Hold), Home Depot is expected to perform in line with the overall market in the upcoming period [5]

Core Viewpoint - Home Depot is expected to report first-quarter fiscal 2025 results on May 20, with anticipated revenue growth of 8% year over year, reaching $39.3 billion, while earnings per share (EPS) is projected to decline by 1.1% to $3.59 [1][2]. Financial Performance - The company has shown a positive earnings surprise trend over the last four quarters, with an average surprise of 2.6% and a 3% surprise in the last quarter [2]. - Home Depot's Earnings ESP stands at -0.32% with a Zacks Rank of 3 (Hold), indicating uncertainty regarding an earnings beat this quarter [3][4]. Market Trends - The first-quarter results are expected to reflect continued top-line recovery, driven by SRS contributions, broad-based category growth, and positive Pro sales [5]. - Comparable store sales are predicted to increase by 3.8%, with a 2.1% rise in customer transactions and a 1.4% increase in average ticket size [7]. Strategic Initiatives - Home Depot is advancing its "One Home Depot" plan, focusing on supply-chain expansion, technology investments, and digital enhancements to ensure a seamless shopping experience [6]. - The interconnected retail model and strong tech infrastructure have bolstered web traffic and supported the development of a scalable Pro ecosystem [7]. Challenges - The company faces challenges from softened demand in high-ticket discretionary categories and macroeconomic pressures, including elevated interest rates affecting consumer behavior [8][9]. - Operating income is expected to increase by only 0.7%, with a decline in operating margin by 90 basis points [10]. Stock Performance - Home Depot's shares have gained 8.8% over the past year, underperforming the S&P 500 and the Retail-Wholesale sector, which grew by 17.6% and 10.9%, respectively [11]. - The stock currently trades at a forward P/E multiple of 24.15X, above the industry average of 21.42X and the S&P 500's average of 21.59X, indicating a premium valuation [16]. Investment Outlook - Home Depot's long-term outlook remains solid due to its leadership in the home improvement sector and execution of its strategic initiatives, although near-term headwinds may limit growth potential [19][21]. - The company is well-positioned to meet evolving consumer demands, but investors may need to remain cautious in the short term due to ongoing economic pressures [21][24].