Note: Home Depot FY’21 ended on January 30, 2022.
Home Depot stock (NYSE: HD), the world’s largest home improvement retailer, has declined by about 6% over the last five trading days (one week) and currently stands at around $311. It should be noted that the broader S&P500 fell 2% over the last week. The retailer’s stock has been down 11% over the last year, due to investors’ fears about an impending slowdown in the home improvement market. A significant 5% drop in customer traffic was noted in the nine-month period ending late October. In contrast, it was up 1.3% in 2021. Also, the company had a worse inventory position in recent Q3 with more than a 30% jump from the prior year, whereas rival Lowe’s (NYSE: LOW) saw its inventory grow only 11%. However, it should also be noted that HD generates more sales from professional contractors than Lowe’s does, and that diversity is helping at a time when many consumers are pulling back on home project spending. The company’s third-quarter revenue grew to $38.9 billion, up 5.6% year-over-year (y-o-y). Further, earnings per share increased even faster, rising 8.2% y-o-y to $4.24. Despite declining home prices and slowing home sales, comparable-store sales rose 4% to mark just a modest slowdown from the prior quarter’s 6% boost. And this year’s increase came on top of the 6% spike the company achieved a year ago.
For the full year 2022, the company’s management reaffirmed its guidance for fiscal 2022 comparable sales growth to increase by 3% over fiscal 2021. To add to this, management said it expects earnings per share to increase at a rate in the mid-single digits.
Now, is HD stock poised to decline in the short term or are gains looking more likely? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 61% chance of a rise in HD stock over the next month (twenty-one trading days). See our analysis of HD’s Stock Chance Of Rise for more details.
Calculation of ‘Event Probability’ and ‘Chance of rising’ using the last ten years’ data
 Returns of -5.5% or lower over a five-day period on 66 occasions out of 2517 (3%); Stock rose in the next five days in 36 of these 66 instances (55%)
 Returns of -2.8% or lower over a ten-day period on 379 occasions out of 2518 (15%); Stock rose in the next ten days in 240 of these 379 instances (63%)
 Returns of -3.9% or lower over a twenty-one-day period on 411 occasions out of 2515 (16%); Stock rose in the next twenty-one days in 250 of these 411 instances (61%)
It is helpful to see how its peers stack up. HD Peers shows how Home Depot’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
|S&P 500 Return||2%||2%||74%|
|Trefis Multi-Strategy Portfolio||5%||5%||231%|
 Month-to-date and year-to-date as of 1/20/2023
 Cumulative total returns since the end of 2016
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