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Can Home Depot Maintain Its Upward Momentum?

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May. 16 2019, Published 12:31 p.m. ET

Stock performance

Home Depot (HD) will be reporting its first-quarter earnings results before the market opens on May 21. As of May 15, the company was trading at $191.76, a rise of 0.9% since its announcement of its fourth-quarter earnings results on February 26.

The company is also trading at a discount of 11.0% to its 52-week high of $215.43 and at a premium of 21.3% to its 52-week low of $158.09.

In the last quarter, Home Depot posted adjusted EPS of $2.25, outperforming analysts’ estimate of $2.16. However, its revenue and SSSG (same-store sales growth) fell short of analysts’ expectations. The company’s management blamed unfavorable weather conditions for weak sales. Despite soft sales in the fourth quarter, the company’s stock rose due to optimism surrounding its initiatives to enhance the interconnected customer experience. Also, the Fed’s toning down of its aggressive rate hike stance, the lower unemployment rate, and wage inflation have contributed to the rise in the company’s stock price.

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Year-to-date performance

Year-to-date, Home Depot has returned 11.6% as of May 15. The company has been lagging the broader equity market, with the S&P 500 Index (SPY) returning 13.7% as of the same date. Home Depot’s peers Lowe’s Companies (LOW), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY) have returned 14.5%, 5.5%, and 34.9%, respectively, as of May 15. The SPDR S&P Homebuilders ETF (XHB), which invests in home improvement and furnishing companies, has returned 23.6% YTD.

Series overview

With Home Depot’s first-quarter earnings results around the corner, in this series, we’ll look at analysts’ revenue and EPS estimates. We’ll also be covering analysts’ expectations and management’s guidance for 2019. In the end, we’ll look at analysts’ recommendations and Home Depot’s valuation multiple.

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