Home Depot Stock Drops After Earnings Miss. Why the CEO Is B

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Dow Jones NewsNov 18, 12:13 PM UTC
DJ Home Depot Stock Drops After Earnings Miss. Why the CEO Is Blaming Storms. -- Barrons.com

By Sabrina Escobar and George Glover

 

Home Depot stock was falling on Tuesday after the big-box retailer reported weaker-than-expected earnings, fueling investors' worries about stalling home improvement demand.

 

Shares dropped 2.6% to $348.84 ahead of the opening bell. Futures tracking the S&P 500 were 0.3% lower.

 

The move lower came after Home Depot reported adjusted third-quarter earnings of $3.74 a share, as sales climbed 2.8% from a year ago to $41.4 billion. Analysts were expecting adjusted earnings of $3.84 a share on $41.2 billion in revenue, according to FactSet.

 

Comparable sales, which excludes newly opened stores, climbed just 0.2% from a year ago. Analysts were expecting a 1.3% jump.

 

Home Depot also slashed its profit outlook. It now expects adjusted earnings per share to fall by 5% over the fiscal year ending in January 2026, having previously forecast a 2% drop.

 

Home Depot President and CEO Ted Decker blamed the earnings miss on a lack of storms. Over the third quarter of 2024, hurricane-fueled demand boosted home-improvement sales in affected regions.

 

"An expected increase in demand in the third quarter did not materialize. We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand," Decker added.

 

Shares in fellow home-improvement chain Lowe's were down 2.3%.

 

This is breaking news. Read a preview of Home Depot's earnings below and check back for more analysis soon.

 

Home Depot kicks off big-box earnings season on Tuesday. And Wall Street is clearly managing expectations.

 

Estimates for the retailer's earnings and same-store sales have edged down slightly in the past few weeks, reflecting stock market jitters about demand for home improvement throughout the third quarter.

 

Analysts now expect adjusted earnings of $3.84 a share on $41.2 billion in revenue, according to FactSet. Same-store sales are expected to tick up by 1.3% from a year ago. At the end of October, projections called for a 1.5% increase in same-store sales and $3.86 in adjusted earnings.

 

Despite prominent predictions like one from Lowe's CEO only a couple of months ago, a rebound in the home-improvement sector hasn't come, third-party data show. The reason: the housing market just hasn't picked up, keeping Americans from ambitious remodeling projects.

 

Visits to Home Depot stores, for example, have dropped every month this year except August compared with last year, foot-traffic numbers from Placer.ai show.

 

"While we do not believe industry demand has taken a step backward, momentum exiting the fiscal second quarter appears to have stalled," wrote Bobby Griffin, an analyst at Raymond James.

 

Griffin reiterated a Market Perform rating on both Home Depot and Lowe's last week.

 

An extra challenge that home-improvement retailers have this quarter is going up against last year's hurricane-fueled demand that boosted sales in affected regions.

 

And tariffs are still a worry. Retailers are closely monitoring whether or when shoppers will balk at prices bumped up by import costs.

 

Home Depot, according to analysts, is insulated from many of those tariff pressures -- roughly half of its merchandise is sourced from the U.S. But executives have warned that some prices will be moving higher, which analysts think could dampen demand even more.

 

Home Depot stock is down 7% this year; the benchmark S&P 500 has gained 14%.

 

UBS analyst Michael Lasser is more upbeat on Home Depot, which he admits "is not the consensus view." For him, the long-term outlook for investors is solid.

 

"With each passing day, the housing stock grows older and more in need of repair and replacement, more time passes since the outsized demand during the pandemic, and more home equity is being tapped into," Lasser wrote last week previewing Home Depot's earnings.

 

Those factors should eventually bring home-improvement stocks out of their slump even if the Federal Reserve doesn't cut interest rates more -- and Home Depot is well positioned to meet those needs.

 

Joseph Feldman, an analyst at Telsey Advisory Group, also believes homeowners will stop putting off larger projects sometime in the next year, regardless of what the Fed does. But he expects "improvement to be gradual, especially as near-term macro headwinds continue."

 

Write to Sabrina Escobar at [e-mail]

 

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 18, 2025 07:13 ET (12:13 GMT)

 
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