Connect with us

Hi, what are you looking for?

Investing

Should you buy Home Depot stock despite weak guidance?

Shares of Home Depot Inc (NYSE: HD) are down nearly 4.0% on Tuesday even though the home improvement retailer reported better-than-expected earnings for its fiscal first quarter.

Home Depot stock down on a hit to revenue

The stock is also taking a hit this morning because the quarterly revenue came in well below Street estimates. Still, on CNBC’s “Squawk Box”, Oppenheimer’s Brian Nagel said:

A clear sales miss in the first quarter. Now, a lot of that seemed to be weather and lumber prices which are probably shorter term in nature. Nonetheless, they now have a more dampened view of 2023.

Other notable figures in the earnings release include customer transactions that were down 4.8% versus the previous year while average ticket per transaction edged up 0.2% only.

Home Depot stock is down more than 15% versus its year-to-date high at writing.

Is Home Depot stock worth buying?

Also a negative was the guidance that Home Depot slashed today that suggests softening consumer demand.

The multinational now expects up to a 13% hit to its per-share earnings this year on a 2.0% to 5.0% decline in sales – its first year-on-year decline in those metrics since fiscal 2009. According to the Oppenheimer analyst:

It’s a weak report. [But] this is happening against a very concerned backdrop towards consumer. As weather got more spring-like, you’ve seen sales pick up. So, I don’t think that’s going to be a big pause for the stock today.

Nagel currently has a price target of $400 on the Home Depot stock that signals a whopping 40% upside from here.

Notable figures in Home Depot Q1 earnings release

Net income printed at $3.87 billion versus the year-ago $4.32 billion Per-share earnings also tanked significantly from $4.09 to $3.87 Sales slipped 4.2% on a year-over-year basis to $37.26 billion FactSet consensus was $3.80 a share on $38.31 billion in revenue Comparable sales down 4.5% were way worse than Street estimates

Home Depot expects operating margin to sit between 14% and 14.3% in 2023. Nagel added:

EPS beat expectations that’s a testament to HD managing well in a softer sales environment. It’s an underlying positive. And we’ve actually seen better housing data lately.

The post Should you buy Home Depot stock despite weak guidance? appeared first on Invezz.

You May Also Like

Latest News

President Biden is asking Congress to approve nearly $100 billion in emergency funding to aid recovery efforts for the recent deadly storms that ravaged...

Stock

One hallmark of secular bull markets is rotation. When leading stocks, sectors, and industry groups falter, there needs to be others that grab the...

Latest News

Vice President Kamala Harris spent a whopping $1.5 billion during her 15-week campaign that ended in defeat to President-elect Donald Trump, including burning through...

Latest News

Activists on Saturday demanded that the state of California pay millions of dollars to each Black resident in reparations as a way to make...



Disclaimer: Frequencytraders.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


Copyright © 2024 Frequencytraders.com