A Residence Depot retailer in Louisville, Kentucky, on Aug. 14, 2023.
Jon Cherry | Bloomberg | Getty Photographs
Residence Depot will report its fiscal fourth-quarter earnings on Tuesday, as greater rates of interest and residential costs problem the housing market and dampen demand for do-it-yourself tasks.
The corporate is predicted to launch outcomes round 6 a.m. ET and maintain an earnings name at 9 a.m. ET.
Here is what Wall Road expects for the house enchancment retailer, in accordance with a survey of analysts by LSEG:
- Earnings per share: $3.01 anticipated
- Income: $39.16 billion anticipated
Residence Depot has confronted a tougher backdrop for promoting provides for dwelling enchancment tasks. Gross sales progress slowed in 2023, after customers’ large urge for food for dwelling renovations throughout the Covid-19 pandemic returned to extra typical patterns. Inflation and a shift again to spending on companies equivalent to holidays and eating places additionally dinged client demand for bigger tasks and pricier objects.
Since roughly the center of 2023, Residence Depot’s leaders have pinned the corporate’s issues on a harder housing market. Chief Monetary Officer Richard McPhail informed CNBC in August that buyers have had a “deferral mindset” and have held out for rates of interest to drop earlier than shifting or borrowing cash for greater tasks on their properties, equivalent to a rest room or kitchen renovation.
Whereas in that ready sport, Residence Depot and its rival Lowe’s have made the case to traders that longer-lasting components together with the getting old U.S. dwelling inventory, dwelling fairness positive aspects in the actual property market and Individuals’ shift to hybrid work schedules will increase spending on properties.
Residence Depot has regarded to dwelling professionals as considered one of its main gross sales drivers. It purchased SRS Distribution, a Texas-based firm that sells provides to professionals within the roofing, pool and landscaping companies, for $18.25 billion final yr. It marked the most important acquisition within the firm’s historical past.
Residence Depot raised its full-year outlook in November to replicate better-than-expected third-quarter outcomes and a few elevated hurricane-related demand. The corporate mentioned it anticipated whole gross sales to rise about 4%, citing the impact of getting a 53rd week within the yr and an roughly $6.4 billion contribution from buying SRS.
Nevertheless, Residence Depot mentioned it anticipated comparable gross sales, a metric that features the corporate’s web site and shops open for greater than a yr, to say no about 2.5% for the yr.
Relating to the housing market, there have been few indicators of aid. Mortgage charges have remained excessive regardless of rate of interest cuts by the Federal Reserve. The median value of a house offered in January was $396,900, up 4.8% from the yr earlier than and the very best value ever for the month of January, in accordance with the Nationwide Affiliation of Realtors.
Shares of Residence Depot closed Monday at $382.42. As of Monday’s shut, the corporate’s shares have fallen about 2% to date this yr. That trails behind the S&P 500’s roughly 2% positive aspects throughout the identical interval.
This can be a growing story. Please test again for updates.
