Joining me now to discuss the potential fallout, Everore ISI's Greg Melik. Greg, thank you so much for for being here with us. I know that you cover Home Depot and that was one of the names that came to mind for me as soon as I saw some of these headlines.What do you think the impact will be. You know, we think for the retailers, especially one like Home Depot, they have a big broad enough global supply base. And in the case of Home Depot, the majority of what they're doing, they're sourcing here in the US ...

Group 1 - The Home Depot, Inc. is recognized as one of the 12 Best Retail Dividend Stocks to Buy Now [1] - The company is the leading home improvement retailer, offering approximately 35,000 products for various DIY projects [2] - The Home Depot generated $85 billion in revenue during the first half of 2025, reflecting a 7% increase from the same period in 2024 [3] Group 2 - The Home Depot has a 15-year history of consistent dividend growth, currently providing a quarterly dividend of $2.30 per share with a dividend yield of 2.23% as of September 22 [4]

Core Viewpoint - Oppenheimer analysts suggest that Lowe's shares may be a better investment choice compared to Home Depot's, as the market may be overly optimistic about both companies' future performance [1][2][3]. Company Analysis - Both Lowe's and Home Depot are currently trading at high prices, with anticipated soft sales in the near term due to a stagnant housing market [2][7]. - Lowe's stock price is viewed as a more realistic reflection of the housing market, and the company has greater potential for improvement compared to Home Depot [3][4]. - Oppenheimer has assigned an "outperform" rating to Lowe's with a price target of $320, which is approximately 25% above its recent closing price [4]. - Home Depot received a "perform" rating with a price target of $420, which is only about a 3% premium to its current price and below the average target of $447 from other analysts [5]. Market Context - The housing market is experiencing a decades-long low in turnover, with homeowners hesitant to move due to high mortgage rates, which may delay recovery in home improvement demand [3][7]. - Analysts expect a thaw in the housing market and a rebound in home improvement sales, but the timing of this recovery remains uncertain [2][7].

Group 1 - The article emphasizes the importance of high-quality and reliable dividend growth investments for building growing income for investors [1] - It highlights a focus on investments that are leaders within their industry, aiming to provide stability and long-term wealth creation [1] - The service also includes ideas for writing options to further enhance investors' income [1] Group 2 - The article invites readers to join a membership that provides access to a portfolio, watchlist, and live chat [2] - Members receive early access to all publications and exclusive articles not available elsewhere [2]

Core Insights - The potential for lower interest rates is expected to be gradual and may not provide the necessary momentum to revitalize the housing market [1] Group 1 - Analysts from Oppenheimer suggest that the impact of lower interest rates on the housing market will be limited and slow [1]

Group 1 - Companies such as Walmart, Home Depot, Macy's, and Adidas have announced price hikes due to tariffs from the Trump administration [3][4] - Nearly 50% of firms surveyed indicated that tariff implementation or uncertainty around trade policy has affected their price or cost expectations for 2025 and 2026 [3][4] - Tariffs and trade policy remain the top concern for CFOs, impacting their outlook on the economy and organizational plans [4][6] Group 2 - CFOs have increased their expectations for real GDP growth to 1.8% from 1.4% in the previous survey, with a decrease in the probability of negative economic growth to 13.6% from 22.7% [5] - The average optimism rating about the U.S. economy among CFOs rose to 62.9, up from 60.9 in the second quarter [5] - Price growth is expected to be approximately 30% lower in 2025 and about 25% lower in 2026 without the impact of tariffs [6]

Core Insights - Home Depot and Floor & Decor are significant players in the Retail - Home Furnishings industry, with Home Depot being the largest home improvement retailer globally, while Floor & Decor specializes in hard-surface flooring [1][2]. Home Depot Overview - Home Depot has a market capitalization of approximately $409 billion and operates over 2,300 stores, offering a wide range of building materials, tools, appliances, and décor products [1]. - For fiscal 2025, Home Depot anticipates total sales growth of about 2.8%, comparable sales growth of roughly 1%, and an adjusted operating margin of 13.4% [3]. - In Q2, Home Depot's sales increased by 4.9% year-over-year to $45.3 billion, with 1% growth in overall comparable sales [4]. - The company is focusing on digital transformation, with online comparable sales rising about 12% in the quarter, enhancing customer satisfaction and engagement [5]. - The professional customer segment is a major growth driver, with significant spending increases observed among Pro customers utilizing trade credit facilities [6]. Floor & Decor Overview - Floor & Decor has a market capitalization of around $8.8 billion and operates over 250 warehouse-format stores, focusing on the hard-surface flooring market [2]. - In Q2, Floor & Decor reported a 7.1% year-over-year increase in net sales and an 11.5% rise in earnings per share, aided by margin expansion [9]. - The company plans to open 20 new warehouse stores in fiscal 2025 and at least another 20 in 2026, contributing to revenue and market share growth [10]. - Floor & Decor is benefiting from high-margin verticals, particularly design services and commercial projects, with design-driven sales growing rapidly [11]. - Management forecasts fiscal 2025 revenues between $4.66 billion and $4.75 billion, reflecting 5-7% year-over-year growth [12]. Comparative Performance - Over the past six months, Home Depot shares have increased by 13.9%, while Floor & Decor shares have decreased by 1.2%, contrasting with the overall industry growth of 12.5% [20]. - Home Depot's forward P/E ratio is 25.86, while Floor & Decor's is 39.17, indicating differing valuations [21]. - Home Depot's scale, diversified offerings, and digital capabilities provide resilience against economic fluctuations, while Floor & Decor faces challenges from a weak housing market and discretionary spending pressures [22].

Core Insights - The Home Depot has launched a digital platform aimed at assisting professional renovators, remodelers, and specialty tradespeople in managing complex projects [1][2] - The Project Planning tool allows users to create materials lists, track orders and deliveries, and set delivery preferences, enhancing project management efficiency [2][3] - The platform provides early pricing and inventory visibility, enabling professionals to give accurate estimates to clients and facilitating multiuser collaboration [3] Company Strategy - Home Depot's Project Planning tool is designed to streamline the planning, purchasing, and monitoring of complex projects, leveraging the company's extensive product assortment and expertise [4] - The company recognizes that contractors and remodelers are crucial to its market positioning over the next decade, as these professional customers spend more per project and require greater supply reliability [4][5] - Technology plays a vital role in Home Depot's B2B expansion, with initiatives including pro-specific digital platforms, AI-powered delivery scheduling, and dynamic inventory forecasting [6] Market Positioning - In March 2024, Home Depot announced the acquisition of SRS, a distribution company for contractors, to accelerate growth within its professional customer base and expand its total addressable market [7] - The company views the professional segment as a more reliable growth driver compared to the do-it-yourself market, which is evenly split in terms of business [7]

Core Viewpoint - Home Depot's multiyear downturn may be nearing an end, with potential for recovery driven by lower interest rates and increased consumer spending [1][3][5] Group 1: Economic Environment - The Federal Reserve is cutting interest rates by 0.25% to stimulate consumer spending and address a weak labor market, with further cuts possible [2] - Lower interest rates can lead to increased consumer borrowing for home improvement projects, benefiting Home Depot [5][6] - Economic uncertainty is the primary reason customers are deferring large home improvement projects, according to Home Depot's CEO [6] Group 2: Company Performance and Strategy - Home Depot's earnings have been declining, with fiscal 2025 same-store sales expected to grow by only 1% [1][12] - The company has invested heavily in its professional and commercial contractor business, including the $18.25 billion acquisition of SRS Distribution [7][8] - The SRS acquisition positions Home Depot for future growth, potentially amplifying benefits from lower interest rates [8] Group 3: Market Valuation - Home Depot's stock is currently priced as if interest rates will continue to fall, despite its recent struggles [9][12] - The stock has a price-to-earnings ratio of 28.2, which is above its 10-year median P/E of 23, indicating that earnings would need to grow significantly for valuation to align with historical averages [13][14] - While Home Depot is a quality company, it is not considered a strong buy at current valuations, although it may be a good long-term investment [15][16][17]

Group 1 - The Home Depot, Inc. has completed the acquisition of GMS Inc. for $5.5 billion, enhancing its position in the building materials distribution sector [2][3] - The acquisition allows The Home Depot to better serve professional contractors and unlock cross-selling opportunities [3] - Nearly 80% of GMS shares were tendered, facilitating its integration as a wholly owned subsidiary of The Home Depot [3] Group 2 - The Home Depot is recognized as one of the best stocks for financial stability and investment [1][4] - The company operates as the world's largest home improvement retailer, providing a wide range of building materials and professional solutions [4]