WARNING: Low Demand Could DRILL Home Depot Investors Tomorrow...

Well, folks, here we are again, staring down the barrel of a Home Depot earnings report, and let me tell you, the mood is about as upbeat as watching paint dry… literally. In short, with the company’s next earnings scheduled to drop on August 13, 2024, the recent consensus from Wall Street is that we might not be celebrating this time around.

(Source: Tip Ranks) 

Which may come as a shock to some, considering Home Depot is on a 16 quarter hot streak of beating analysts’ EPS estimates by a mile (the last miss being in May of 2020). 

However, while Home Depot has arisen as the Tom Brady of earnings season, beating expectations and making it look easy - lately, the company is looking more like post-Bucs Brady, still good but a little past its prime. 

(Source: X) 

For instance in the last quarter, Home Depot reported $36.42 billion in revenue, which was a smidge below (-0.58%) the analysts’ forecasts. They managed to beat earnings expectations by a hair, posting $3.63 per share against the anticipated $3.59. But much like that friend who always shows up late to the party, the stock didn’t budge much—flatlining like my mood when I’m told to take out the trash. (Which I literally just did before writing this… ask my wife). 

(Source: Giphy) 

However, with that said, while Home Depot squeaked by with another EPS win, the guidance is the real mood damper here. You see, over the past 90 days, while revenue estimates for the full year of 2024 have been revised up from $154.47 billion to $158.88 billion, the earnings estimates have taken a nosedive from $15.35 to $15.11 per share. Which is kind of like the last season of Game of Thrones compared to the entire series… dreadful. 

(Source: Chain Store Age)

Plus, when you throw in the element that Home Depot is a major barometer for the housing market and consumer confidence, the company has only increased its store count by a mere 2% in the last decade. Translation: Men are becoming soft these days (Change my mind). 

(Source: Giphy) 

For example, in fiscal 2023, they reported a 2.9% decline in revenue, and the outlook for fiscal 2024 isn’t looking much brighter, with projected sales growth of just 1%. This comes amidst a backdrop of consumers tightening their wallets due to inflation and recession fears—because who wants to splurge on a new drill when they’re worried about their next mortgage payment, amirite? 

However, in light of the lack of masculinity declining demand, some analysts are still giving Home Depot a thumbs-up, with a consensus rating of 2.2, indicating “Moderate Buy.” That’s not a bad score, but it’s not exactly a home run either.

(Source: Market Beat) 

In addition, price targets peak at $426, which implies a nice 23% upside, where analysts like Telsey Advisory Group, on the other hand, have maintained its price target of $360. Read: Tell investors not to hold their breath without telling investors to hold their breath.

Now of course, those are all the fundamentals, but what do the technicals look like heading into tomorrow's earnings? Spoiler: They’re terrible. 

Every indicator we have at Stocks.News is screaming “strong sell” on the stock, with all 15 moving averages showing downtrend continuation. Meaning, Home Depot's fundamentals look bleak, while the price action is downright uglier than Deadpool's dog “Peggy. 

So with all that said, the anxiety is real going into tomorrow morning's earnings report. Will we get a Q2 earnings surprise? Or will the declining demand and slowed growth give Home Depot an overdue drilling (pun intended obvi)? Only time will tell my friends, only time will tell… 

At the time of this writing, Home Depot closed -0.81% on the day (up +0.21% YTD). 

Stocks.News doesn't hold any positions in companies mentioned in the article.