Home Depot Touts Biggest Comps Growth Since 2023, Analysts Remain Bullish

Core Insights - Home Depot's shares rose following the release of second-quarter results, indicating positive market reaction to the financial performance [1] Financial Performance - Home Depot reported adjusted earnings of $4.68 per share, slightly missing the consensus estimate of $4.71 per share [3] - Net sales increased by 4.9% year-on-year to $45.3 billion, which was below the consensus of $45.4 billion [3] - The company experienced a 1.0% growth in comparable store sales (comps), just below the consensus of 1.1%, but a significant improvement from the previous quarter's decline of 0.3% [2][3] Sales Trends - The comps growth marked the first increase since Q1 2023 and the most significant increase since Q4 2022, with July showing a strong 3.0% comp growth, the best monthly performance of the year [3] - U.S. comps rose by 1.4%, with improvements noted throughout the second quarter: 0.3% in May, 0.5% in June, and 3.3% in July [4] Customer Behavior - The improvement in sales was attributed to increased engagement in smaller projects by customers, despite ongoing pressure on spending for larger projects due to high interest rates affecting home turnover and renovation activity [4][5] Guidance and Analyst Ratings - Management reiterated full-year guidance, projecting sales growth of approximately 2.8% and a decline in adjusted earnings of 2.0%, compared to consensus expectations of 3.0% growth and 0.3% decline [7] - Analysts maintained positive ratings: DA Davidson set a price target of $450, Goldman Sachs at $400, and Telsey Advisory Group at $455 [6]