Home Depot Q1 Earnings Preview: Will the Home Improvement Boom Continue?

Home Depot Stock Forecast

Home Depot (HD:NYE), the world’s largest home improvement retailer, will report its first quarter 2023 results on Tuesday, May 16. The company has been a beneficiary of the strong demand for home improvement products and services amid the pandemic, as consumers spent more time and money on their homes.

However, the moderation in demand could weigh on Home Depot’s comparable sales in Q1 and 2023, as consumers shift their spending to other categories and activities. The company’s CFO, Richard McPhail, warned that the home improvement market could decline in 2023, reflecting a normalization of transactions.

Analysts expect Home Depot stock to report revenues of $38.34 billion, reflecting a slight decline from $38.9 billion in the first quarter of 2022. The company’s comparable sales are also expected to decline by 0.8% year-over-year, compared to a 6.4% increase in Q1 of 2022.

Meanwhile, analysts expect Home Depot stock to report earnings of $3.81 per share in Q1, compared to $4.09 in Q1 of 2022. The company’s earnings could be pressured by higher product costs, increased shrinkage, and lower operating leverage.

Despite the expected slowdown in Q1, Home Depot has a solid track record of beating analysts’ estimates in the past several quarters. The company has also been investing in its digital capabilities, supply chain network, and customer experience to drive long-term growth.

Analyst Michael Baker remains Bullish Ahead of the Q1 earnings, Wedbush analyst Michael Baker reiterated his Buy rating and $350 price target on Home Depot stock. The analyst believes that Home Depot’s sales trends remain strong and that the company could benefit from favorable housing market conditions and consumer spending patterns.

Baker also expects Home Depot stock to raise its dividend by 10% and announce a new share repurchase program of $20 billion.

 

Home Depot Stock Forecast:

Wall Street is cautiously optimistic about Home Depot stock ahead of Q1 earnings. It has a Buy consensus rating based on 14 Buys and nine Holds. The average price target of $337.55 implies a 14.79% upside potential from current levels. Shares have gained about 19% so far in 2023.

 

The Takeaway:

Home Depot is a leader in the home improvement industry and has a loyal customer base and a strong brand reputation. The company’s Q1 results are likely to reflect its resilience and growth potential.

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