Home Depot (HD) Rises After Earnings But Rally Is Premature

Steve Miller
home depot stock hd research analysis outlook bullish rating image august 21

Home Depot NYSE: HD Stock Weekly Chart 

Home Depot stock (ticker: HD) rose by 4% on Tuesday, after the company posted mixed earnings compared to Wall Street expectations. 

However, our view is that Home Depot stock price will likely drop again soon to test recent lows.

Our approach to stock analysis uses market cycles to project price action.

Our expectation is that the declining phase for the stock is forthcoming and thus that this rally is premature. Our forecast is for a test of $205 by October.

Home Depot Earnings Report Analysis

The company reported earnings per share of $3.17 and total revenue of $30.8 billion, compared to analyst estimates of $3.09 and $31.1 billion. Management expects earnings of $10.03 per share, which remains conservative compared to the average estimate of $10.09. 

CFO Carol Tome explained that, “The relevant housing metrics that drive home improvement spending, notably home price appreciation, existing home turnover, household formation and the age of the housing stock continue to be supportive of our outlook.”

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