Home Depot Sounds the Siren After Historic Earnings Miss

by Jordan Chussler
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.

Effective federal funds rate (top) and existing home sales (bottom).
Click here to see full-sized image.

 

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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Until next time,

Jordan Chussler
Managing Editor
Weiss Ratings Daily

About the Managing Editor

Jordan Chussler is the Managing Editor for a team of research analysts and senior editors. He oversees the development and production of trading and investment products and services reporting on traditional equities, including stocks, ETFs, income vehicles, options and private equity. He is a 15-year veteran of the digital publishing industry and also serves as a contributing writer for Weiss Ratings Daily.

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