A Home Depot store in Livermore, California, US, on Thursday, May 12, 2022. Home Depot Inc. is scheduled to release earnings figures on May 17. Photographer:
David Paul Morris | Bloomberg | Getty Images
Just an awful earnings report from the stock market’s most important retailer on Tuesday: Home Depot.
Bottom line – the broader-market implications of Tuesday morning’s post-earnings stock move for Home Depot are going to be significant. And don’t expect much improvement from the home improvement retailer any time soon.
Home Depot is tumbling 5%, or $13 a share, in premarket trading. That’s worth about 100 points on the Dow Jones Industrial Average and should take a bite out of the S&P 500 too. Remember, it’s the most impactful retailer in the price-weighted Dow – having almost double the weight of Walmart (since it is almost double the price). And despite Walmart’s much larger market cap – as we highlighted yesterday – Home Depot has both a greater index and earnings influence in the S&P 500 due to the Walton family’s hefty stake in Walmart that reduces its weighting in the main equity benchmark. Lowe’s is down 3% pre-open in sympathy, but it won’t report results until next Tuesday.
Home Depot, 1 day
Home Depot’s EPS beat by 2 cents as a 3.9% reduction in SG&A costs helped a little. However, it is still the retailer’s first earnings decline since May 2020 (i.e., since the start of the pandemic).
But the real story is the demand destruction – as indicated by the company’s huge revenue miss. Sales were 2.7% below Wall Street’s expectations ($37.26B vs. $38.28B est. from Refinitiv) – it’s biggest revenue miss since November 2002. It is also the second straight revenue miss for the home improvement retailer – which follows 12 straight revenue beats. It’s also the biggest revenue drop since the Financial Crisis (revenue down 4.2% YOY in the latest quarter). Comps came in down 4.5% vs. down 1.6% consensus estimate…
Read the full article here