It was just an awful earnings report from the stock market’s most important retailer on Tuesday: Home Depot (NYSE:HD).
Bottom line – the broader-market implications of Tuesday morning’s post-earnings stock move for Home Depot are going to be significant. And traders are warned not to expect much improvement from the home improvement retailer anytime soon.
Home Depot is tumbling $4.66, or 1.6%, in early Tuesday trading, to $283.88. 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 (NYSE:WMT) 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’s EPS beat by two 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 Covid 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) – its 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.
Related Stories
