Home Depot Sounds the Siren After Historic Earnings Miss
|By Jordan Chussler
We’re 12 days away from the end of Q1 earnings season, and the news this past week isn’t inspiring renewed confidence in the market or the economy.
Focusing on the sore thumb, The Home Depot (HD) posted its worst revenue miss in over 20 years.
Sales were 2.7% below Wall Street’s expectations — $37.26 billion versus the $38.28 estimated — marking its worst miss since November 2002.
Home Depot’s earnings are also used as an indicator for the broad economy since its business is significantly shaped by two macroeconomic factors: home sales and interest rates.
With the former falling and the latter at the highest level since 2007, HD’s revenue has been suffering since the start of the year, which by extension suggests the American economy has also been suffering.
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In April, existing home sales fell 23.2% year over year, which has an outsized impact on Home Depot’s business.
After announcing the $1 billion miss, which executives largely pinned on lumber deflation, the company cut its outlook stating that 2023 sales and comparable store sales are expected to drop between 2% and 5%.
Shares fell 5% in premarket trading and are down over 13% since its year-to-date high on Feb. 2.
There are, however, glimmers of hope in the market as Senior Analyst Sean Brodrick explained in his column this week.
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