Home Depot is the IBD Stock Of The Day for Friday. Shares of Dow Jones retailer are rebounding off key technical support after earnings as they work on a new base.
Home Depot on Tuesday topped Q3 analyst estimates and narrowed its 2024 guidance.
The home improvement retailer reported adjusted earnings of $3.78 per share, down 0.8%, on 6.8% revenue growth to $40.22 billion.
FactSet expected a 4% earnings decline on $39.3 billion in sales.
Comparable sales fell for the eighth consecutive quarter, sliding 1.3% in Q3, with a 1.2% slip in the U.S. The last time Home Depot posted an increase to same-store sales was Q3 2022.
"As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects, as well as incremental sales related to hurricane demand," Home Depot CEO Ted Decker said in the Q3 earnings release. However, he warned that "macroeconomic uncertainty remains."
Home Depot narrowed its earnings guidance, now expecting a 1% decline in adjusted EPS for the year, vs. its prior forecast for a 1% to 3% drop. The company hiked its sales outlook, expecting 4% growth, from its previous outlook for a 2.5% to 3.5% increase. Home Depot also noted that it expects "some impact" from potential tariffs that President-elect Donald Trump plans to implement. But the Dow retailer says it sources over half of its products in North America, so it is "confident" in its ability to "manage through" cost hikes, which would affect the entire industry.
A number of firms hiked their price targets on Home Depot stock after results.
Evercore ISI noted that Home Depot's comparable transaction decline was the "best since fall started" following an extended period of negative traffic, and forecasts earnings reach $17 for 2026. Evercore raised its price target on HD stock by $10 to 430 and kept an outperform rating on the shares.
Loop Capital in a Wednesday note wrote that it is turning more bullish on sales trends as the Federal Reserve moves to lower interest rates. Meanwhile, recent hurricanes and storms should lift demand. Loop raised its price target on HD to 465 from 460 and maintained a buy rating on the stock.
Stifel on Thursday also lauded the results, but its revenue outlook "remains largely unchanged" as it expects "a tepid home improvement category recovery." The firm raised its price target by $5 to 405 and kept a hold rating on shares.
Home Depot Stock Performance
HD stock inched up slightly Friday.
Shares are working on a short consolidation, which could form into a real base if given another week.
The current pattern looks like a mini cup-with-handle base, appearing as part of a base-on-base formation. The latest consolidation could be viewed as a handle to a massive base, going all the way back to December 2021.
HD stock is currently bouncing off support at its 10-week moving average. If shares rebounded above their weekly high of 416.02, that would indicate an early entry opportunity for investors.
However, Home Depot's fundamentals are middling. The stock has a 70 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Shares have a 61 EPS Rating, based on its string of earnings declines over the last seven quarters. HD stock has a 78 RS Rating as its relative strength line has rebounded from early November lows.
Home Depot stock has advanced more than 17% so far this year.
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