Is Home Depot Stock Still a Buy After Earnings?

A Home Depot store in Washington DC — (Image credit: Ting Shen/Bloomberg via Getty Images)

Home Depot (HD) stock is struggling for direction Tuesday after the home improvement retailer beat top- and bottom-line expectations for its third quarter and raised its full-year outlook.

In the three months ended October 27, Home Depot's revenue increased 6.6% year over year to $40.2 billion even as its comparable-store sales dipped 1.3% – including a 1.2% decline in the United States. Meanwhile, its earnings per share (EPS) decreased 1.8% from the year-ago period to $3.78.

"While macroeconomic uncertainty remains, our third-quarter performance exceeded our expectations," said Home Depot CEO Ted Decker in a statement. "As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand. I would like to thank all of our associates for their dedication in serving our customers and communities."

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The results handily beat analysts' expectations. Wall Street was anticipating revenue of $39.3 billion and earnings of $3.64 per share, according to CNBC.

As a result of its strong performance, Home Depot raised its full-year outlook. The company now expects to achieve revenue growth of approximately 4%, up from its previous forecast of 2.5% to 3.5%. It added that it expects its earnings per share to decline approximately 1% from the prior year, compared with its previous forecast for a drop of 1% to 3%.

Is Home Depot stock a buy, sell or hold?

Home Depot has done well on the price charts so far in 2024, up 20% on a total return basis (price change plus dividends). And Wall Street is overwhelmingly bullish toward the Dow Jones stock.

According to S&P Global Market Intelligence, the average analyst price target is $414.98, representing implied upside of nearly 3% to current levels. Additionally, the consensus recommendation among the 40 covering analysts it tracks is a Buy.

Financial services firm Truist Securities is one of the most bullish outfits on the consumer discretionary stock with a Buy rating and $459 price target.

"While the company had the benefit of favorable/warm weather for most of the quarter and incremental storm-related sales, third quarter unequivocally came in better than what we expected three months ago," says Truist analyst Scot Ciccarelli.

The analyst adds that proprietary data indicated that sales trends continued to improve over the three-month period, both before and after the devastating hurricanes that hit this season.

"Further, as we highlighted in our preview, our data indicated that October was the first monthly year-over-year sales gain for Home Depot and Lowe's (LOW, Buy) in well over two years, which we think is an important inflection in trend," he says.

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.