Home Depot Warns of Weak Consumer Demand Ahead: What to Know
Home Depot stock is choppy Tuesday as investors parse the retailer's Q2 earnings beat and downwardly revised comparable sales forecast.


Home Depot (HD) stock is struggling for direction Tuesday after the home improvement retailer reported higher-than-expected results for its second quarter but warned of weaker consumer demand.
In the three months ended July 28, Home Depot's revenue increased 0.6% year-over-year to $43.2 billion, helped by its recent acquisition of SRS Distribution, which contributed $1.3 billion of revenue in the quarter. Its earnings per share (EPS) decreased by a penny from the year-ago period to $4.67.
Comparable sales for the quarter were down 3.3%, including a 3.6% drop in the United States.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The underlying long-term fundamentals supporting home improvement demand are strong," said Home Depot CEO Ted Decker in a statement. "During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects. However, the team continued to navigate this unique environment while executing at a high level."
Home Depot's headline results beat analysts' expectations. Wall Street was anticipating revenue of $43.1 billion and earnings of $4.49 per share, according to CNBC. However, the comparable sales result was far worse than the 2.1% decline analysts had forecasted.
As a result of its performance in the first half and its recently completed acquisition of SRS Distribution, Home Depot updated its full-year outlook, which includes a 53rd week. The company now anticipates revenue growth in the range of 2.5% to 3.5% and earnings per share to increase between 1% to 3%. This compares with its previous forecast for revenue and EPS growth of approximately 1% apiece.
Home Depot also revised its comparable sales outlook, now anticipating a decline of 3% to 4%. The company said a 3% decline "implies a consumer demand environment consistent with the first half of fiscal 2024" while a 4% decline "implies incremental pressure on consumer demand." The company had previously forecasted comparable sales to decline approximately 1%.
Is Home Depot stock a buy, sell or hold?
Home Depot has struggled on the price charts this year, up a slight 1% on a total return basis (price change plus dividends) vs the S&P 500's 13% return. Still, Wall Street is bullish on blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for HD stock is $383.08, representing implied upside of more than 10% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm Jefferies is one of the more bullish outfits on the Dow Jones stock with a Buy rating and $426 price target.
"A noisy quarter given the six-week sales contribution from recently acquired SRS, but nonetheless, the underlying trend is clear: higher interest rates and greater macroeconomic uncertainty pressured weaker spend across home improvement projects during the quarter," Jefferies analyst Jonathan Matuszewski said in a note this morning.
Jefferies' $426 price target sits almost 23% above HD's current price.
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
13 Answers to Pressing Social Security Questions
From smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
Keep Tax Collectors at Bay with Muni Bond Funds
Municipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Keep Tax Collectors at Bay with Muni Bond Funds
Municipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the Fairway
Think of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty Moves
If you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
Cord Cutting Could Help You Save Over $10,000 in 10 Years
How cutting the cord can save you money and how those savings can grow over time.
-
Should I Buy Stocks or Should I Buy Bonds Right Now?
Generally speaking, stocks provide reasonable growth while bonds provide stable income. Each play important roles in diversified portfolios.
-
You Were Planning to Retire This Year: Should You Go Ahead?
If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get It
The Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning Playbook
Consider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.