Home Depot and Lowe's are booming in a housing market bust
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Goldman Sachs said earnings beats can and should continue through at least 2022. It issued a bullish outlook on the market Tuesday, with chief U.S. equity strategist David Kostin saying he expects continued earnings growth to drive the S&P 500 to 5,100 at the end of 2022, a return of roughly 9% from here. Shares of retail giant Lowe's also rose 4.2% while Target shares got a 1.1% lift. Both companies are scheduled to report quarterly results Wednesday before the bell. Was the biggest gainer in the Dow by far on Tuesday, jumping 5.7% after results topped estimates and net sales jumped 9.8% last quarter. The home improvement retailer also said fiscal fourth-quarter sales were already tracking higher than last quarter, pointing to a possible strong year-end finish.
Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Only 111 people have searched for HD on MarketBeat in the last 30 days. Short interest in Home Depot has recently increased by 22.11%, indicating that investor sentiment is decreasing significantly. "Additionally, more than half of the homeowners we surveyed have no intention of selling or moving out of their current residences in the next 20 years or ever," said Marine Sargsyan, Houzz staff economist. "There is inflation in the market and elasticity, but not to the degree that we anticipated, and the customer shows us they are resilient," said Home Depot's McPhail.
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"The stickier drivers of inflation are likely to persist, but our base case is that they will not outweigh the improvement we expect in the transitory elements," he wrote in a note to clients. The region-wide MSCI ex-Japan benchmark slipped 1.34% heading into the close of trading, with the Shanghai Composite down 2%, while the Nikkei 225 in Tokyo closed lower for a fourth consecutive session at 27,424.47 points. Futures contracts tied to the Dow Jones Industrial Average suggest a 165 point pullback for the benchmark average, while those linked to the S&P 500 are priced for an 18point retreat. MRK stock shows a solid 94 out of a perfect 99 IBD Composite Rating,per theIBD Stock Checkup.Investors can use the IBD Composite Rating to easily gauge the quality of a stock's fundamental and technical metrics.
It also sells its products through websites, including homedepot.com; blinds.com, an online site for custom window coverings; and thecompanystore.com, an online site for textiles and décor products. As of December 31, 2021, the company operated 2,317 stores in the United States. The Home Depot, Inc. was incorporated in 1978 and is based in Atlanta, Georgia. After Wednesday's opening bell, the Dow Jones Industrial Average moved up 0.5%, while the S&P 500 rose 0.45%. The tech-heavy Nasdaq composite gained 0.4% in morning action, with Charter Communications diving more than 8% to the bottom of the index. A handful of analysts cut their price target on Charter after the company increased its 2023 capital spending guidance on Tuesday.
Home Depot Inc. stock rises Monday, outperforms market
"With the robust retail sales read and solid start to retail earnings, it's crystal clear that inflation isn't standing in the way of consumers," said E-Trade's Mike Loewengart. Still, the company seems like a good bet to beat the S&P 500 due to its strong competitive position in home improvement retail, its highly profitable business, and a generous capital return program. Rival Lowe'shas also been a strong performer over the last decade, though Home Depot has been the better stock.
Shares are trying to hold above their 50-day line amid Monday's 0.5% decline, according to IBD MarketSmith chart analysis. Fabrinet and ZipRecruiter were key earnings movers before the open Tuesday. Fabrinet shares surged 12%, while ZipRecruiter shares declined 5% in extended trade. Will Home Depot's winning streak continue over the next five years?
Top Analyst Reports for Home Depot, Diageo & Enbridge
Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements. Among Dow Jones stocks, Apple shares rallied 0.7% Tuesday, just above its key 50-day line. The 50-day line, which had been a key support level, has switched into an area of resistance to monitor. These are seven top stocks to buy and watch in today's stock market, including three Dow Jones leaders.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average. Microsoft gained 0.5% Monday, closing just below its long-term 200-day line, which is a key resistance area to watch. Tesla stock climbed 3.1% Monday, closing at its highest level since May 4. Shares are trying to again decisively rise above resistance around their 200-day line, which is a key level to watch.
Dow's 183-point climb led by gains for shares of Home Depot, Microsoft
The company issued revenue guidance of $155.69 billion-$155.69 billion, compared to the consensus revenue estimate of $156.23 billion. This payout ratio is at a healthy, sustainable level, below 75%. According to analysts' consensus price target of $343.44, Home Depot has a forecasted upside of 3.0% from its current price of $333.43. The company's average rating score is 2.71, and is based on 17 buy ratings, 7 hold ratings, and no sell ratings. A recent survey of nearly 4,000 homeowners by Houzz, a home improvement and design website, found that only 1% of homeowners reported having canceled a home improvement project in 2022.
Meanwhile, 37% completed a project in 2022 and nearly one-quarter said they were planning to start a home improvement project in the next 12 months. "Spending for home improvements will continue to face headwinds from declining home sales, rising interest rates and the increasing costs of contractor labor and building materials." "The growth rate for improvement spending will slow due to declines for existing home sales," said Robert Dietz, NAHB's chief economist. "However, an aging housing stock, work from home trends and a decline for household mobility all favor remodeling spending."
That equity grew by an unprecedented $1.2 trillion in the first quarter of this year alone. Per homeowner, it amounts to roughly $207,000 in tappable equity. This company generates strong cash flows and stands to benefit when stock prices recover. Represents the company's profit divided by the outstanding shares of its common stock. Best Buy shares declined more than 3% after Bank of America downgraded the stock to underperform from neutral, with a new price target at 69, down from 80.
Tesla stock skidded 4.1% Tuesday, falling sharply for a second straight day and hitting a new 52-week low. Shares traded 1.8% lower Wednesday morning, threatening to extend a losing streak to three days. Early Wednesday, Goldman Sachs cut its price target from 305 to 235, citing softer demand.
In overseas markets, European stocks slipped to a one-week low as traders retreated from recent market peaks amid China's intensified tech crackdown and the acceleration of coronavirus infections in several Asian countries. Wall Street futures moved lower Tuesday, while Treasury bond yields touched a ten-day trough, as investors peeled away from risk markets amid a surge in coronavirus infections in Asia and slowing growth signals here in the United States. With the market showing signs of strength, investors have the green light to increase exposure, but keep positions small to start. There's still plenty of uncertainty for the stock market to navigate, so having a fair amount of cash on hand still makes sense. The stock market rally remains healthy, with the Dow Jones Industrial Average on a four-day win streak. The Nasdaq and S&P 500 index shrugged off Thursday's downside reversal and have risen two straight sessions.
© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart's disclaimer. 7,985 employees have rated Home Depot Chief Executive Officer Craig Menear on Glassdoor.com. Craig Menear has an approval rating of 84% among the company's employees.
Ahead of Tuesday's open, Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures were each down 0.1% vs. fair value. Remember that overnight action in Dow Jones futuresand elsewhere doesn't necessarily translate into actual trading in the next regularstock market session. Among Dow Jones leaders, Apple and Microsoft rose 0.6% and 0.5%, respectively, in today's stock market.
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