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Atlanta, Georgia-based The Home Depot, Inc. (HD) is a home improvement retailer that sells various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. Valued at a market cap of $406.7 billion, the company is expected to announce its fiscal Q4 earnings results before the market opens on Tuesday, Feb. 25.
Ahead of this event, analysts project the home improvement company to report a profit of $3.01 per share, up 6.7% from $2.82 per share in the year-ago quarter. The company has a solid track record of consistently beating Wall Street's bottom-line estimates in the last four quarters. In Q3, HD’s earnings of $3.78 per share outpaced the Wall Street estimates by a margin of 3.9%.
For fiscal 2024, analysts expect HD to report an EPS of $15.12, marginally up from a profit of $15.11 in fiscal 2023.
Shares of HD have soared 15.1% over the past 52 weeks, lagging behind both the S&P 500 Index's ($SPX) 26.5% rise and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 33.1% return over the same time frame.
On Jan. 15, the core Consumer Price Index (CPI) for December was reported to be lower than expected. As declining inflation is beneficial to the economy and offers consumers some relief from higher prices, Home Depot's stock increased by 3.4% on this news. However, on Nov. 12, shares of HD plunged 1.3% after its Q3 earnings release despite delivering better-than-expected Q3 adjusted earnings of $3.78 and revenues of $40.2 billion.
Moreover, noting its Q3 performance, the company raised its full-year 2024 sales growth guidance to 4%. However, a 1.3% decline in comparable sales and a 9.2% year-over-year rise in operating expenses that led to a drop in both gross and adjusted operating profit margin might have overshadowed the positives and lowered investor confidence. Adjusted EPS was also down 1.8% from the year-ago quarter, adding to the downtrend.
Yet, Wall Street analysts are strongly optimistic about Home Depot’s stock, with a "Strong Buy" rating overall. Among 36 analysts covering the stock, 26 recommend "Strong Buy," one suggests a “Moderate Buy,” eight recommend “Hold,” and one indicates a “Strong Sell” rating. This configuration is slightly more bullish than three months ago, with 25 analysts suggesting a “Strong Buy.”
The average price target for HD is $435.32, which indicates a modest 6.3% potential upside from the current levels.
