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Can Home Depot (HD) Q4 Earnings Beat Amid Soft Sales Trends?
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Home Depot, Inc. (HD - Free Report) is set to report fourth-quarter fiscal 2023 results on Feb 20, before market open. Its top and bottom lines are likely to have declined year over year in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings of $2.75 per share indicates a decline of 16.7% from the year-ago period’s reported figure. The consensus estimate has moved down a penny in the past 30 days.
The consensus mark for quarterly revenues is pegged at $34.6 billion, indicating a decline of 3.6% from that reported in the year-ago quarter.
For fiscal 2023, the Zacks Consensus Estimate for earnings of $15.05 per share implies a decline of 9.8% from the year-ago period’s reported figure. The consensus estimate has remained unchanged in the past 30 days. The consensus mark for fiscal 2023 revenues is pegged at $152.4 billion, indicating a decline of 3.2% from that reported in the year-ago quarter.
In the last reported quarter, the company delivered an earnings surprise of 1.3%. The leading home improvement retailer delivered a trailing four-quarter average earnings surprise of 1.76%.
Home Depot has been witnessing favorable trends, with the Pro segment mainly driving sales for the past several quarters. Pro sales outpaced DIY sales in third-quarter fiscal 2023. Although lower than the year-ago quarter's level, the company noted that Pro backlogs continued to be healthy and elevated relative to historic trends. Continued growth in the Pro business is likely to have aided the top line in the to-be-reported quarter.
Additionally, Home Depot has been seeing significant benefits from the execution of its One Home Depot plan, focused on expanding the supply chain, technology investments and digital enhancements. The company’s interconnected retail strategy and underlying technology infrastructure have consistently been boosting web traffic for the past few quarters. This is expected to have aided digital sales in the to-be-reported quarter.
HD is expected to have witnessed growth in the Pro and DIY customer categories, and digital momentum in the fiscal fourth quarter.
However, Home Depot’s fourth-quarter fiscal 2023 performance is likely to have been affected by soft consumer spending trends due to rising inflation, normalized transactions and continued investments to capture market share. On the last reported quarter’s earnings call, the company noted that transactions gradually normalized as consumer spending shifted from goods to services.
The company has been witnessing continued pressure in some big-ticket, discretionary categories, a trend which started in fourth-quarter fiscal 2022. The deflation of core commodity categories, particularly in lumber prices, has been affecting the top-line performance. We expect this trend to have continued in the fiscal fourth quarter, affecting its sales results.
Moreover, the company’s fiscal fourth-quarter results are expected to reflect the continued negative impacts of lumber deflation, leading to soft comps.
For fiscal 2023, the company expects comps to decrease in the range of 3-4% compared with the earlier guidance of a 2-5% decline. We expect comps to decline 3.8% in fourth-quarter fiscal 2023 due to continued headwinds related to lumber and copper deflation. Our model estimates comps for fiscal 2023 to be down 3.3%.
Zacks Model
Our proven model conclusively predicts an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Home Depot has an Earnings ESP of +1.86% and a Zacks Rank #3 at present.
Other Stocks With the Favorable Combination
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this reporting cycle.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +0.87% and a Zacks Rank #1. AEO is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.65 billion, indicating 10.5% growth from that reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle’s fiscal fourth-quarter earnings is pegged at 50 cents, indicating 35.1% growth from the year-ago quarter's actuals. The consensus mark has moved up 4.2% in the past 30 days.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +1.08% and a Zacks Rank #2. DKS is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.75 billion, implying 4.2% growth from that reported in the prior-year quarter.
The Zacks Consensus Estimate for DKS’ fiscal fourth-quarter earnings is pegged at $3.33 per share, indicating year-over-year growth of 13.7%. The consensus mark has moved up 1.2% in the past seven days.
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +0.02% and a Zacks Rank #3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $5.75 million, indicating 10.3% growth from that reported in the prior-year quarter.
The Zacks Consensus Estimate for Ross Stores’ fiscal fourth-quarter earnings is pegged at $1.62 per share, indicating 23.7% growth from that reported in the year-ago quarter. The consensus mark has remained unchanged in the past 30 days.
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Can Home Depot (HD) Q4 Earnings Beat Amid Soft Sales Trends?
Home Depot, Inc. (HD - Free Report) is set to report fourth-quarter fiscal 2023 results on Feb 20, before market open. Its top and bottom lines are likely to have declined year over year in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings of $2.75 per share indicates a decline of 16.7% from the year-ago period’s reported figure. The consensus estimate has moved down a penny in the past 30 days.
The consensus mark for quarterly revenues is pegged at $34.6 billion, indicating a decline of 3.6% from that reported in the year-ago quarter.
For fiscal 2023, the Zacks Consensus Estimate for earnings of $15.05 per share implies a decline of 9.8% from the year-ago period’s reported figure. The consensus estimate has remained unchanged in the past 30 days. The consensus mark for fiscal 2023 revenues is pegged at $152.4 billion, indicating a decline of 3.2% from that reported in the year-ago quarter.
In the last reported quarter, the company delivered an earnings surprise of 1.3%. The leading home improvement retailer delivered a trailing four-quarter average earnings surprise of 1.76%.
The Home Depot, Inc. Price and EPS Surprise
The Home Depot, Inc. price-eps-surprise | The Home Depot, Inc. Quote
Key Factors to Note
Home Depot has been witnessing favorable trends, with the Pro segment mainly driving sales for the past several quarters. Pro sales outpaced DIY sales in third-quarter fiscal 2023. Although lower than the year-ago quarter's level, the company noted that Pro backlogs continued to be healthy and elevated relative to historic trends. Continued growth in the Pro business is likely to have aided the top line in the to-be-reported quarter.
Additionally, Home Depot has been seeing significant benefits from the execution of its One Home Depot plan, focused on expanding the supply chain, technology investments and digital enhancements. The company’s interconnected retail strategy and underlying technology infrastructure have consistently been boosting web traffic for the past few quarters. This is expected to have aided digital sales in the to-be-reported quarter.
HD is expected to have witnessed growth in the Pro and DIY customer categories, and digital momentum in the fiscal fourth quarter.
However, Home Depot’s fourth-quarter fiscal 2023 performance is likely to have been affected by soft consumer spending trends due to rising inflation, normalized transactions and continued investments to capture market share. On the last reported quarter’s earnings call, the company noted that transactions gradually normalized as consumer spending shifted from goods to services.
The company has been witnessing continued pressure in some big-ticket, discretionary categories, a trend which started in fourth-quarter fiscal 2022. The deflation of core commodity categories, particularly in lumber prices, has been affecting the top-line performance. We expect this trend to have continued in the fiscal fourth quarter, affecting its sales results.
Moreover, the company’s fiscal fourth-quarter results are expected to reflect the continued negative impacts of lumber deflation, leading to soft comps.
For fiscal 2023, the company expects comps to decrease in the range of 3-4% compared with the earlier guidance of a 2-5% decline. We expect comps to decline 3.8% in fourth-quarter fiscal 2023 due to continued headwinds related to lumber and copper deflation. Our model estimates comps for fiscal 2023 to be down 3.3%.
Zacks Model
Our proven model conclusively predicts an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Home Depot has an Earnings ESP of +1.86% and a Zacks Rank #3 at present.
Other Stocks With the Favorable Combination
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this reporting cycle.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +0.87% and a Zacks Rank #1. AEO is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.65 billion, indicating 10.5% growth from that reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle’s fiscal fourth-quarter earnings is pegged at 50 cents, indicating 35.1% growth from the year-ago quarter's actuals. The consensus mark has moved up 4.2% in the past 30 days.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +1.08% and a Zacks Rank #2. DKS is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.75 billion, implying 4.2% growth from that reported in the prior-year quarter.
The Zacks Consensus Estimate for DKS’ fiscal fourth-quarter earnings is pegged at $3.33 per share, indicating year-over-year growth of 13.7%. The consensus mark has moved up 1.2% in the past seven days.
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +0.02% and a Zacks Rank #3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $5.75 million, indicating 10.3% growth from that reported in the prior-year quarter.
The Zacks Consensus Estimate for Ross Stores’ fiscal fourth-quarter earnings is pegged at $1.62 per share, indicating 23.7% growth from that reported in the year-ago quarter. The consensus mark has remained unchanged in the past 30 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.