Home Depot, Inc. is a retailer of building and home improvement goods and products. It sells building materials, home renovation products, lawn and garden products, and home décor items. The company operates in three geographic segments: the United States, Canada and Mexico. It provides home improvement installation services, as well as tool and equipment rental.
The company has a market capitalization of $293.55B and will release its earnings results for the fiscal quarter ending October 2022 this Tuesday, November 15th before the market opens.
Zacks ranks Home Depot Rank #3 (Hold) in the Top 23% at #57/252 in the Building Products – Retail industry. For this report, EPS is expected at 4.11 (4.85% y/y) and for the fiscal year at 16.67. Earnings are expected to be 37.93B with an ESP of 0%, which would be a y/y growth of 3.02%. The estimate has had 1 downward and 0 upward revisions in the last 60 days. HD has a P/E ratio of 17.23 and a PEG ratio of 1.53. The company has reported results below the estimate only 1 time in the last 20 reports, in May 2020.
Last quarter the company reported EPS of $5.05 and revenue of $43.79B.
HD’s third-quarter results likely benefited from continued strong demand for home improvement projects, a strong housing market and continued investment. The company’s average ticket price has increased due to high-value purchases by homebuilders. In this regard, a 6.1% increase in the average ticket is expected, compared to a 2.5% decrease in the number of customer transactions.
HD has benefited significantly from the execution of its One Home Depot programme, which focuses on supply chain expansion, technology investments and digital enhancement. The company’s connected retail strategy and underlying technology infrastructure have been steadily driving web traffic. Growth in digital sales is expected in line with the digital momentum along with Pro and DIY customers.
However, Home Depot could face continued cost pressures in the quarter, driven by inflation, supply chain dynamics and the consumer spending environment amid the recession.
Higher transportation costs, investments in its supply chain and product mix have resulted in a higher cost of goods sold, leading to a lower gross margin expected to be down more than 30%. Higher inventory levels and interest expenses are expected to impact results.
Technical Analysis – Home Depot D1 – $312.26
#HomeDepot had a bearish outlook during the year until reaching a low of 164.10 in June from where it made a strong upward push to a high of 332.89 before returning to this low again. Currently the price has recovered approximately 70% of the fall with a strong bullish momentum at yesterday’s close trading above 300.0, the 200-day SMA at 302.65 and the 61.8% Fibo at 307.15.
In the case of promising results the price could reach the current highs at 332.89 and even surpass them along with the previous highs of March at 340.44 to head towards 350.00 and if surpassed to the February highs at 374.66.
If not there could be a bounce off the 78.6%-88.6% Fibo retracement ranging from 318.47–325.21 back to the aforementioned lows. If there is a break of this low zone, the price could reach the February 2021 lows at 246.38.
ADX at 17.86 +Di at 22.45 -DI at 13.47, no marked trend after relaxing the downtrend initiated from the 420.29 highs in December 2021.
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