Home Depot has revised its full-year earnings and comparable sales outlook in response to ongoing macroeconomic challenges that are affecting consumer demand. Despite reporting better-than-expected top and bottom line results in its fiscal second quarter, the home-improvement retailer anticipates a decrease in earnings per share of between 2% and 4% for fiscal 2024.
This is a significant adjustment from the previous guidance, which projected a modest earnings growth of about 1%. Adjusted earnings are now expected to decline by 1% to 3%. The consensus estimate from Capital IQ forecasts a normalized and GAAP EPS of $15.15. In terms of comparable sales, Home Depot now predicts a drop of 3% to 4%, contrasting sharply with its earlier projection, which anticipated only a 1% decrease.
Currently, analysts on Wall Street estimate a decline of approximately 1.6%. The company’s more conservative outlook indicates that consumer demand has remained consistent with performance in the first half of the year, albeit with added pressure reflected in the upper range of their forecast. Truist Securities commented in a client note, stating, "While we remain bullish on Home Depot's medium to long-term growth potential and believe that future rate cuts could enhance the stock's multiple, the current fundamentals are softer than we had anticipated at this stage, complicating the near-term scenario." Truist maintains a buy rating on Home Depot’s stock, setting a price target of $396. Looking ahead, Home Depot forecasts overall sales growth of between 2.5% and 3.5% for fiscal 2024, which is a significant increase from earlier estimates of about 1%.
Analysts are currently projecting revenue of $154.5 billion for the company. For the quarterly period ending July 28, Home Depot saw adjusted EPS drop slightly to $4.67 from $4.68 in the prior year, surpassing expectations which predicted an EPS of $4.55. Sales climbed 0.6% to $43.18 billion, bolstered by $1.3 billion from the acquisition of SRS Distribution, a building-products supplier.
This amount exceeded market expectations that were set at $42.71 billion. Chief Executive Ted Decker emphasized the robust long-term fundamentals underpinning home improvement demand. He stated, "During the quarter, higher interest rates and increased macroeconomic uncertainty have adversely affected consumer spending, leading to reduced expenditure on home improvement projects." On a comparative basis, sales at the company level fell by 3.3%, which is steeper than the 2.2% decline forecasted by analysts.
Furthermore, sales in the United States dropped by 3.6%. The number of transactions decreased by 1.8% to a total of 451 million, while average ticket prices saw a decrease of 1.3% to $88.90. Additionally, sales per retail square foot fell by 3.6%. In the stock market, Home Depot's shares traded at $342.48, reflecting a change of -$3.33 or a 0.96% decline..