SOURCE The Home Depot A webcast will be available by logging onto http://ir.homedepot.com/events-and-presentations and selecting the Second Quarter Earnings Conference Call icon. The webcast will be archived, and the replay will be available beginning at approximately noon on August 19. The Home Depot is the world's largest home improvement specialty retailer. The company operates more than 2,350 retail stores, over 800 branches and more than 325 distribution centers that directly fulfill customer orders ac ...

Group 1 - The core issue is the impact of the U.S. imposing tariffs as high as 245% on Chinese goods, which significantly affects retail businesses reliant on Chinese supply chains [1][4][6] - Retailers are increasingly using Canadian warehouses to store goods temporarily, taking advantage of tax exemptions and the ability to reclaim tariffs if goods are exported within four years [4][6][8] - The volume of containers shipped from China to Canada has surged by 50%, as retailers find this strategy more cost-effective compared to paying high tariffs in the U.S. [6][8][11] Group 2 - The high tariffs are causing increased prices for everyday goods, which are ultimately passed on to consumers, leading to a rise in living costs for ordinary Americans [11][19][32] - Major retailers like Walmart, Target, and Home Depot are feeling the pressure and have even approached the White House to discuss tariff issues, although the outcomes remain uncertain [15][17][19] - Concerns are growing about the long-term sustainability of small and medium-sized businesses that rely on Chinese suppliers, with fears of a significant shake-up in the retail industry [15][19][29] Group 3 - The ongoing tariff situation is creating a challenging environment for retailers as they prepare for the holiday season, with uncertainty about future tariff policies [17][19][32] - The trade war is causing broader economic concerns, with warnings from hedge fund managers about potential negative impacts on the U.S. economy if tariffs are not lifted [19][20][29] - The global economic repercussions are evident, with significant declines in stock markets across Asia and concerns about the feasibility of shifting supply chains to other countries [22][25][29]

Investment Rating - The report maintains a "Weaker than Market" rating for the U.S. stock market [1] Core Insights - The U.S. stock market experienced a sudden pullback influenced by non-farm employment data, with the S&P 500 declining by 2.4% and the Nasdaq by 2.2% [3] - Among sectors, large-cap value stocks outperformed large-cap growth and small-cap stocks, indicating a preference for stability in turbulent market conditions [3] - The report highlights that three sectors saw gains while 21 sectors faced declines, with utilities, food and staples retailing, and media and entertainment being the only sectors to rise [3] Summary by Sections Price Trends - The S&P 500 fell by 2.4% and the Nasdaq by 2.2% this week, with large-cap value stocks declining by 1.8% compared to a 3.1% drop in large-cap growth stocks [3] - Utilities (+1.6%), food and staples retailing (+0.9%), and media and entertainment (+0.2%) were the only sectors to increase, while transportation (-5.9%), materials (-5.1%), and retail (-4.8%) faced the largest declines [3] Fund Flows - The estimated fund flow for S&P 500 constituents was -$16.95 billion this week, a significant increase from the previous week's -$2.2 billion [4] - Media and entertainment (+$1.59 billion), utilities (+$0.27 billion), and food and staples retailing (+$0.042 billion) saw inflows, while healthcare equipment and services (-$3.47 billion) and financials (-$4.15 billion) experienced the largest outflows [4] Earnings Forecast - The report indicates a 0.6% upward adjustment in the 12-month EPS forecast for S&P 500 constituents, with 18 sectors seeing an increase and 5 sectors experiencing downgrades [5] - Retail (+3.3%), media and entertainment (+2.0%), and technology hardware (+1.5%) led the upward revisions, while healthcare equipment and services faced a significant downgrade of -3.6% [5]

Core Viewpoint - The home improvement industry is a significant segment of the retail sector, valued at $1 trillion, with Home Depot and Lowe's as the leading competitors [1][2]. Company Analysis - Home Depot and Lowe's are both profitable companies that return substantial capital to shareholders, making them attractive options for investors seeking exposure to the home improvement market [2]. - Home Depot derives 50% of its revenue from professional customers, while Lowe's only captures 30% from this segment, giving Home Depot a competitive advantage [6]. - Home Depot's trailing-12-month revenue stands at $163 billion, nearly double Lowe's $83 billion, indicating a stronger market position [11]. - Lowe's is actively working to close the gap with Home Depot by enhancing its pro division and improving customer loyalty programs [12]. Market Conditions - The home improvement sector is currently facing challenges due to higher interest rates affecting the housing market, leading to reduced spending on large purchases [4]. - Despite current struggles, the long-term outlook remains positive due to factors such as the aging housing stock in the U.S., which will require more maintenance and renovations [8]. - There is a significant supply and demand imbalance in the housing market, with millions of homes in inventory shortage, which may lead homeowners to invest in renovations rather than purchasing new homes [9]. - The increase in home prices over the past five years has created trillions of dollars in untapped equity, suggesting potential pent-up demand for home improvement products once macro conditions improve [10]. Valuation Comparison - As of July 28, Lowe's shares are trading at a price-to-earnings ratio of 19.1, which is a 25% discount compared to Home Depot's 25.6 multiple, indicating a potential for better returns from Lowe's in the next five years [13].

Core Insights - Home Depot Inc. (HD) is leveraging its omnichannel strategy as a key driver for long-term growth, integrating physical retail with digital convenience to meet changing customer preferences [1] Omnichannel Strategy - In Q1 fiscal 2025, over 45% of online orders were fulfilled through stores, indicating the company's commitment to seamless integration between digital and physical platforms [2][10] - The company is enhancing app experience, search relevance, and online checkout as part of its omnichannel initiatives [2] - Home Depot is investing in improved delivery capabilities, a frictionless returns experience, and expanded Pro customer features to enhance the customer journey [3] Sales Performance - Despite advancements in omnichannel execution, overall comparable sales decreased by 2.8% in Q1 due to macroeconomic pressures and weak DIY demand [4][10] - The effectiveness of the omnichannel strategy in driving conversion and ticket size will be crucial for determining its transformative potential [5] Competitive Landscape - Competitors like Lowe's Companies Inc. (LOW) and Williams-Sonoma Inc. (WSM) are also enhancing their omnichannel strategies to remain competitive [6] - Lowe's reported that over 60% of online orders were fulfilled through stores, with improvements in mobile app functionality and same-day delivery capabilities [7] - Williams-Sonoma achieved a 3.4% increase in comparable brand revenue in Q1, supported by strong cross-channel engagement and inventory optimization [8] Financial Metrics - Home Depot's shares have increased by 3.8% over the past year, outperforming the industry growth of 1.8% [9] - The company trades at a forward price-to-earnings ratio of 23.66X, higher than the industry's 21.47X [11] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 1.3% for fiscal 2025, with a projected growth of 9.2% for fiscal 2026 [12]

Core Viewpoint - The Fidelity MSCI Consumer Discretionary Index ETF (FDIS) is a passively managed ETF that provides broad exposure to the Consumer Discretionary sector, appealing to both retail and institutional investors due to its low costs and tax efficiency [1][3]. Group 1: ETF Overview - FDIS was launched on October 21, 2013, and has accumulated over $1.85 billion in assets, making it one of the largest ETFs in its category [3]. - The ETF aims to match the performance of the MSCI USA IMI Consumer Discretionary Index, which reflects the U.S. consumer discretionary sector [3]. Group 2: Cost Structure - FDIS has an annual operating expense ratio of 0.08%, making it the least expensive option in its category [4]. - The ETF offers a 12-month trailing dividend yield of 0.76% [4]. Group 3: Sector Exposure and Holdings - The ETF is fully allocated to the Consumer Discretionary sector, with Amazon.com Inc (AMZN) representing approximately 23.76% of total assets [5][6]. - The top 10 holdings constitute about 58.79% of total assets under management [6]. Group 4: Performance Metrics - As of July 28, 2025, FDIS has increased by approximately 21.88% over the past year and has a year-to-date gain of about 0.27% [7]. - The ETF has traded between $75.33 and $104.24 in the last 52 weeks, with a beta of 1.29 and a standard deviation of 23.15% over the trailing three-year period, indicating medium risk [7]. Group 5: Alternatives - FDIS has a Zacks ETF Rank of 5 (Strong Sell), suggesting it may not be the best option for investors seeking exposure to the Consumer Discretionary sector [8]. - Alternatives include the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY), which have larger asset bases and competitive expense ratios [10].

Core Viewpoint - Home Depot (NYSE: HD) is recognized as a leading name in the home improvement sector, despite experiencing a decline in investor favor [1]. Company Analysis - Home Depot has seen a decrease in stock popularity among investors, indicating potential challenges in market perception [1]. - The company is viewed as a sustainable growth stock, with a focus on strong fundamentals such as revenue growth and profitability margins [1]. Investment Strategy - The investment approach emphasizes a systematic strategy that combines technical analysis with fundamental insights, focusing on long-term investments rather than day trading [1]. - The strategy prioritizes companies with a balanced risk profile and strong management quality, aiming for consistent annualized returns [1]. Market Dynamics - The analysis highlights the importance of macroeconomic trends in evaluating investment opportunities within the home improvement industry [1]. - The motivation for sharing insights is rooted in the desire to educate the investing community and promote better decision-making in financial markets [1].

Core Insights - Home Depot Inc.'s inventory strategy for fiscal 2025 is designed to enhance operational resilience and meet customer demand amid macroeconomic uncertainties, with a year-over-year inventory increase of $3.3 billion to $25.8 billion in Q1 fiscal 2025 [1][11] Inventory Strategy - The increase in inventory is a strategic decision to maintain high in-stock levels ahead of the peak spring season, rather than a reaction to overstocking or panic buying, resulting in improved product availability and faster fulfillment [2] - Home Depot's diversified sourcing strategy, with over 50% of goods sourced domestically, reduces reliance on any single country, helping to manage tariff risks and supply chain disruptions [3][11] - The use of digital tools, such as the AI-powered Magic Apron, enhances online conversions and customer confidence by improving access to product information [3] Market Position and Competitors - Despite a challenging macroeconomic environment, Home Depot has successfully captured demand for smaller DIY and Pro projects, with strong engagement in high-demand categories like building materials and outdoor garden products [4] - Competitors like Lowe's and Floor & Decor are adopting more disciplined inventory strategies, focusing on tighter SKU management and demand forecasting to optimize working capital [5][6] - Lowe's is investing in supply chain modernization and advanced demand forecasting tools to enhance operational efficiency and compete effectively with Home Depot [6][7] - Floor & Decor maintains a focused inventory model with deep inventory levels in key categories, ensuring customer access to necessary products for entire projects [8][9] Financial Performance - Home Depot's shares have declined by 4.6% year to date, compared to a 9.4% decline in the industry [10] - The company trades at a forward price-to-earnings ratio of 23.64X, higher than the industry's 20.52X, with a VGM Score of B [12] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 1.3% for fiscal 2025, but a growth of 9.2% is expected for fiscal 2026 [13]

I have been working in the logistics sector for almost two decades. I have been into stock investing and macroeconomic analysis for almost a decade. Currently, I focus on ASEAN and NYSE/NASDAQ Stocks, particularly in banks, telco, logistics, and hotels. Since 2014, I have been trading on the PH stock market. I focus on banking, telco, and retail sectors. A colleague encouraged me to engage in the stock market as part of my portfolio diversification instead of putting all my savings in banks and properties. ...

Group 1: Home Depot - Home Depot has experienced a decline of 1.8% over the past year, affected by macroeconomic factors such as interest rates and housing sales [1][5] - The company reported a 0.3% decrease in same-store sales for the fiscal first quarter, with foreign-currency translations contributing a 0.7 percentage point decline [5] - Despite current challenges, Home Depot offers a 2.6% dividend yield, which is more than double the S&P 500's yield of 1.2%, and has a history of increasing dividends since 2010 [6][7] - Management expects diluted earnings per share to fall about 3% from $14.91 to approximately $14.26, which will comfortably cover the annual dividend of $9.20 [8] Group 2: PepsiCo - PepsiCo's sales have been sluggish, with adjusted sales rising only 2% in the second quarter, while volume pressure subtracted 1.5 percentage points [10] - The company relies on price increases for revenue growth, which contributed a 4-percentage-point increase, but will need to boost volume for sustainable growth [11] - PepsiCo has increased its quarterly dividend by 5%, maintaining a streak of 53 consecutive years of dividend increases, making it a Dividend King with a 4% dividend yield [12]