Home Depot to report Q1 results next week. Here’s what to expect

The housing market has remained largely resilient to recent challenges like the pandemic and supply chain disruption. Home Depot Inc. (NYSE: HD), the home improvement retailer that is often influenced by housing market trends, maintained stable sales in times of uncertainty, supported by the government’s stimulus program to some extent.

The company’s stock is currently staying almost where it was a year earlier, after a series of ups and downs. Its performance is not very encouraging ahead of next week’s earnings release. The stock that breached the $400 mark at its peak more than two years ago has lost 28% since then.

Outlook

The effective use of resources, including strategic investments, has enabled the company to navigate supply chain challenges, and more recently the impact of interest-rate hikes and economic uncertainties. However, inflation pressures and muted consumer sentiment might weigh on sales in the coming months. The company has issued a cautious outlook for fiscal 2023.

Home Depot is preparing to publish first-quarter results on May 16 in the morning. The market will be closely following the event since the company’s financial performance is expected to provide insights into the overall health of the housing market. Analysts, in general, are of the view that earnings declined to $3.84 per share in the April quarter from $4.09 per share last year, reversing the recent uptrend. The consensus estimate is for a modest decline in revenues for $38.55 billion from $38.91 billion in the year-ago quarter.

During an interaction with analysts, Home Depot’s chief executive officer Ted Decker recently said, “The investments in our associates, stores, digital platforms, supply chain, technology, and other strategic initiatives have strengthened our business and enabled us to grow share and deliver exceptional shareholder value over the long-term. The most important investment we can make is in our people, which is why we are announcing that we are increasing annualized compensation by approximately $1 billion for our frontline hourly associates.”

Q4 Results

Quarterly profit topped expectations regularly since early 2020. The trend continued in the fourth quarter — earnings per share rose 3% to $3.3 and beat estimates by a small margin. Meanwhile, revenues remained unchanged at $35.8 billion and missed expectations. Global comparable sales contracted, marking the first year-over-year dip in several quarters, while customer transactions came in at 378.5 million.

HD opened Monday’s session slightly below $290 and traded lower during the session. The stock is down 10% since the beginning of the year.