Home Depot Earnings Unexpectedly Rise Despite Inflation Headwinds

Home Depot (HD) reported a surprise first-quarter earnings gain early Tuesday and raised full-year revenue guidance even as the home improvement giant starts to feel the impact of inflation on costs and store visits. Lowe’s (LOW) follows Wednesday. Home Depot stock and Lowe’s rose before the open.




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Following a strong 2020 and 2021, this year started off strong for Home Depot and Lowe’s. Their January and February store visits continued above pre-pandemic levels, according to Placer.ai data.

But April visits fell 1.6% for Home Depot and 9.5% for Lowe’s vs. April 2019. Visits grew month over month in both March and April, data firm Placer.ai says.

Spring is typically the strongest season for home improvement retailers, the firm adds.


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Home Depot Earnings

Estimates: Analysts polled by FactSet expected a 5% EPS decline to $3.69 for the April quarter on a 2% revenue drop to $36.705 billion. Same-store sales were seen falling 3% after an 8% gain in the prior holiday quarter.

Results: Home Depot earnings rose slightly to $4.09 a share. Revenue climbed 3.8% to $38.91 billion. Same-store sales rose 2.2%, with U.S. comps up 1.7%.

Outlook: Home Depot sees fiscal 2023 EPS up in the mid-single-digits with total sales and comps up about 3%. Wall Street had seen Home Depot earnings rising 3.6% and revenue up 1.8%. In February, Home Depot guided 2023 EPS growth in the low single digits and sales growth to be “slightly positive.”

Home Depot Stock

Shares of Home Depot rose nearly 3% before the open on the stock market today. That would still be below a falling 50-day moving average and well below the 200-day average.

The relative strength line for Home Depot stock is improving after a slide since December 2021.

Lowe’s Earnings

Estimates: Wall Street forecasts that Lowe’s earnings per share will rise by a penny to $3.22 despite a 3% revenue decrease to $23.765 billion. Same-store sales are seen falling 2.5% after a 5% gain in the prior holiday quarter.

Results: Check back early Wednesday.

Outlook: Analysts sees 2023 earnings per share of $13.39 and revenue of $98.106 billion. That comes after Lowe’s guided higher in February.

Lowe’s Stock

Shares of Lowe’s rose 2% early Tuesday. Lowe’s stock also remains well below key support levels. Floor & Decor

(FND), which modestly beat earnings and sales views May 6, fell 2.3% on Monday and was not yet active Tuesday.

Inflationary Woes Follow Pandemic Boom

For Home Depot and Lowe’s, the pandemic boom in home renovations and spending has eased, while rising interest rates are weighing on the housing sector broadly.

The companies also face shortages of materials and drivers that are driving costs higher.

In 2020 and 2021, consumers stuck at home or moving home spent heavily on renovation projects.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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