Key Takeaways HD's Q3 comparable sales rose just 0.2%, missing forecasts amid weak storm-driven category demand.Consumer caution and housing turnover at 40-year lows are pressuring large discretionary projects.HD cut its FY25 comp sales outlook, signaling demand may be settling into a lower equilibrium.The Home Depot, Inc.’s (HD) comparable sales growth of just 0.2% in the third quarter of fiscal 2025, following a 1% increase in the second quarter, raises an important question: Is this soft comparable sales ...

Core Viewpoint - The Home Depot, Inc. (NYSE:HD) is recognized as one of the best consumer cyclical stocks, operating over 2,300 stores across the US, Canada, and Mexico [1] Analyst Recommendations - As of November 28th, 19 out of 37 analysts rated The Home Depot as a Buy, with 14 Hold and 4 Strong Buy recommendations [2] - The average share price target for The Home Depot is set at $403.36 [2] Recent Analyst Coverage - Citigroup maintained a Buy rating for The Home Depot but lowered the share price target from $422 to $407 following the latest earnings report [3] - The company reported $41.35 billion in revenue for the fiscal third quarter, exceeding analyst estimates of $41.10 billion, but adjusted earnings per share of $3.74 fell short of the $3.84 estimate [3] Management Insights - Management cited lower consumer spending, weaker demand for home improvement products, and fewer storms as reasons for the profit cut [4] - CEO Edward Decker highlighted that home price appreciation, household formation, and housing turnover are currently under pressure, impacting demand [4] - There is an estimated $50 billion cumulative under spend in normal repair and remodel activity in U.S. housing, indicating a potential for future growth despite current pressures [5]

Market Performance - The S&P 500 index closed at 6,849, reflecting a weekly increase of 3.7% and a year-to-date increase of 16.4%[6] - The Nasdaq 100 index reached 25,435, with a weekly rise of 4.9% and a year-to-date increase of 21.0%[6] - The Dow Jones Industrial Average increased by 3.2% this week, with a year-to-date growth of 12.2%[6] Sector Analysis - The automotive and auto parts sector saw a significant weekly increase of 9.3% and a year-to-date increase of 9.9%[9] - The information technology sector reported a weekly rise of 4.6% and a year-to-date increase of 32.8%[9] - The healthcare sector experienced a weekly increase of 1.9% and a year-to-date increase of 21.0%[9] Fund Flows - The energy sector recorded a net inflow of $48 million this week, with a total of $572 million over the past 52 weeks[11] - The materials sector faced a net outflow of $290 million this week, totaling a negative $3.344 billion over the past 52 weeks[11] - The financial sector had a net inflow of $2.106 billion this week, with a total outflow of $6.723 billion over the past 52 weeks[11] Earnings Forecast - The overall EPS adjustment for the energy sector was 0.3% this week, with a year-to-date adjustment of -7.4%[14] - The materials sector saw an EPS adjustment of 0.6% this week, with a year-to-date adjustment of 4.9%[14] - The information technology sector's EPS adjustment was 0.6% this week, with a year-to-date adjustment of 28.0%[14]

Core Viewpoint - The article highlights three dividend-paying stocks—AbbVie, Home Depot, and ExxonMobil—that have consistently raised their dividends for over a decade, offering yields significantly higher than the S&P 500 average, making them attractive long-term investments. AbbVie - AbbVie currently offers a dividend yield of approximately 2.9%, which is more than double the S&P 500 average of 1.2% [3] - The company has a history of over 50 consecutive years of dividend increases, qualifying it as a Dividend King [3][4] - AbbVie recently raised its dividend by 5.5%, and since its spin-off from Abbott Laboratories, it has increased quarterly dividends by over 330% [4] - For the first nine months of the year, AbbVie reported an 8% increase in sales, totaling $44.5 billion, with Skyrizi and Rinvoq generating $18.5 billion, surpassing Humira's current quarterly sales of $3.3 billion [6][7] Home Depot - Home Depot has raised its dividend for 16 consecutive years, with a more than 50% increase since 2020, currently yielding 2.7% [8] - Despite facing challenges due to decreased discretionary spending, the company anticipates a 3% sales growth for the current fiscal year [9] - Home Depot's shares have declined by 13% this year, but the company is expected to recover in the long term due to its strong position in the home repair market [12] ExxonMobil - ExxonMobil offers the highest yield among the three at 3.5%, with a history of 43 consecutive years of annual dividend growth at an average rate of 5.8% [13][14] - The company has faced earnings volatility, with a decline of $3.7 billion to $22.3 billion this year, but it maintains strong financial health, with earnings per share of $5.16 exceeding its annual dividend payout of $4.12 [14][16] - ExxonMobil's stock has increased by 8% this year and is trading at an estimated 16 times its future earnings, presenting a good value for income investors [16]

Group 1 - The Home Depot, Inc. (NYSE:HD) is considered one of the best slow growth stocks, with TD Cowen maintaining a Buy rating but lowering the price target from $470 to $410 following disappointing third-quarter results and a reduced fourth-quarter forecast [1] - The company has revised its full-year 2025 earnings per share outlook to approximately $14.50, down from the previous expectation of $15.00, citing a deteriorating housing market and consumer uncertainty as key factors affecting demand [2] - Inventory levels have increased by 10% year-over-year, raising concerns about gross margins, which are anticipated to decline by around 75 basis points in the fourth quarter [2] Group 2 - Despite the challenges, TD Cowen remains optimistic about Home Depot's competitive position, stating that the company has "more ways to win versus peers" in the home improvement retail sector [3] - Home Depot operates over 2,300 stores globally, providing a wide range of tools, building materials, appliances, and services for both DIY and professional projects [3]

Core Insights - The article discusses the current state of the American consumer market, highlighting mixed signals in retail sales and consumer confidence ahead of the Thanksgiving holiday [2][3] - It emphasizes the polarization in economic activity, particularly between affluent and less-affluent consumers, and the potential impact on consumer spending [4] Consumer Market Overview - Retail sales in the US grew by 0.2% in September, a slowdown from 0.6% in August, with declines in clothing retailers (0.7%), electronics and appliances (0.5%), and car dealerships (0.3%) [2] - The Consumer Confidence Index dropped to 88.7 points in November, down 6.8 points from October's 95.5, indicating a lack of optimism among consumers [3] Economic Insights - EY's chief economist noted a "K-shaped" economy, where affluent individuals experience different economic outcomes compared to less-affluent ones, leading to increased polarization in economic activity [4] - The "A-Pillar" economy, driven by AI, asset prices, and affluent consumers, is at risk if any of these pillars falter, potentially leading to reduced consumer spending [4] Stock Recommendations - The article lists 12 consumer cyclical stocks recommended by analysts, focusing on those with high upside potential and hedge fund sentiment [6][7] - Carvana Co. (NYSE:CVNA) has an average upside potential of 12% and has seen a 79% increase in shares year-to-date, with a target of selling three million vehicles annually over the next 5 to 10 years [8][11] - The Home Depot, Inc. (NYSE:HD) has an average upside potential of 13.01%, but recently cut its full-year earnings forecast due to lower consumer spending and weaker demand for home improvement products [12][14][15]

Consumer Behavior - The consumer is characterized as stable but choiceful, being careful with spending while still participating in key shopping events [2][4] - Retailers expect strong sales during the Turkey 5 holiday weekend, but a deeper drop-off in sales post-holiday is anticipated [3] Retail Environment - Retailers like Dick's Sporting Goods and Best Buy expect more promotional and deeper discounts this year due to consumer sensitivity to pricing [4] - Retailers are raising prices to create a cushion for deeper discounts during key events, reflecting the pressure on consumers [5] Technological Impact - The upcoming holiday season is expected to be the last before widespread adoption of artificial intelligence in shopping, which will change the competitive landscape [6][7] - Retailers will need to adjust quickly to a more commoditized pricing environment driven by technology [7] Profitability Strategies - Retail media and advertising sales are becoming increasingly important for retailer profitability as pricing becomes more ubiquitous [9] - Large, well-positioned retailers like Walmart, Home Depot, and Costco are expected to benefit from their technological advancements [10] Stock Performance - Target is actively working to improve its performance, and there is a belief that the stock's potential for successful improvement is greater than currently priced in [10]

Core Insights - Dividend stocks are attractive for long-term investors seeking reliable cash flow, especially for retirees needing passive income [1][2] - Reinvested dividends can significantly enhance total returns and provide stability during market downturns [2] - The article highlights four top dividend stocks for investment over the next five years [3] Company Summaries Pfizer - Pfizer has maintained 348 consecutive quarterly dividend payments and increased payouts for 16 years, offering a forward yield of around 7% [4][5] - The company is targeting over $7 billion in savings by 2027 to improve operating margins and free cash flow, ensuring it can cover dividend payments while reinvesting [5] - Pfizer reported $9.4 billion in net income on $45 billion in revenue for the first nine months of 2025, with net income up 24% year-over-year [9] Johnson & Johnson - Johnson & Johnson has increased its dividends for 63 consecutive years, yielding around 2.6%, which is more than double the S&P 500 average [10] - The company has a strong balance sheet with an AAA credit rating and over $20 billion in annual free cash flow, supporting continued dividend payouts [10] - In Q3 2025, sales grew by approximately 7% to $24 billion, with adjusted EPS increasing by 16% year-over-year [13] Home Depot - Home Depot has increased its dividend annually for 16 years, currently yielding 2.7% [15] - The company’s recent $5.5 billion acquisition of GMS is expected to enhance its specialty building products business [16] - In Q3, Home Depot's sales rose 2.8% year-over-year to $41.4 billion, with net earnings totaling $3.6 billion [18] Realty Income - Realty Income has a flawless record of paying monthly dividends, with a current yield of approximately 5.7% [20] - The company’s properties are primarily single-tenant, freestanding commercial properties, with over 90% of rental income from resilient businesses [21] - Realty Income's Q3 revenue was $1.47 billion, up about 11% year-over-year, with a strong occupancy rate of 98.7% [23][24]

Market Overview - The Dow Jones Industrial Average closed on November 26th, 2025, with a gain of 314.67 points (0.6679%), reaching 47427.12, driven by investor optimism regarding a potential Federal Reserve interest rate cut in December [1] - Despite mixed economic data, the sentiment around monetary policy easing contributed to a broader rally in U.S. equities ahead of the Thanksgiving holiday [1] Contributing Factors - Expectations of a rate cut, a sustained AI-led rally, and solid corporate earnings reports were key contributors to the market's strong performance [2] - Technology companies experienced renewed interest, extending a multi-day winning streak for major indexes, with advancers significantly outnumbering decliners on the NYSE [2] Company Performance - Boeing (BA) led the Dow's components with a gain of +2.58%, followed by Walmart (WMT) at +2.29% and Microsoft (MSFT) at +1.96% [3] - Goldman Sachs (GS) and Home Depot (HD) also saw increases of +1.66% and +1.51%, respectively [3] - Salesforce (CRM) was the biggest laggard, dropping -2.68%, potentially due to company-specific news or sector rotation, with IBM (IBM) and Merck & Co. (MRK) also declining by -0.39% and -0.24% [3]

Core Viewpoint - Home Depot is experiencing significant stock underperformance due to softer market expectations for housing and home improvement spending, with its stock declining over various time frames compared to the Nasdaq Composite index [2][4][5]. Financial Performance - Home Depot reported third-quarter fiscal 2025 revenue of $41.35 billion, a 2.8% year-over-year increase, slightly exceeding Wall Street's expectation of $41.21 billion [5]. - The adjusted EPS for Home Depot declined by 1.1% annually to $3.74, falling short of the expected $3.83 [5]. - The stock dropped 6% intraday following the earnings report on November 18 [5]. Stock Performance - Home Depot's stock reached a 52-week low of $326.31 in April but has since increased by 7.6% from that level; however, it has dropped 14.1% over the past three months [2]. - Over the past 52 weeks, Home Depot's stock has declined by 18.1%, and it is down 3.2% over the past six months, while the Nasdaq Composite gained 20.8% and 22.9% in the same periods [4]. Market Conditions - The company is facing a challenging operating environment, with a lack of storm activity impacting specific product categories and ongoing consumer uncertainty affecting performance [6]. - Home Depot anticipates continued pressure in the fourth quarter due to these factors [6]. Competitive Comparison - Compared to Lowe's Companies, Inc., which has dropped 13.5% over the past 52 weeks but gained 7.7% over the past six months, Home Depot has been the clear underperformer [7].