Figma Shares Indicated To Open $105/$110
On Wednesday, Bernstein analysts raised their price target for Home Depot stock (NYSE:HD) to $398 from $380, while keeping a Market Perform rating on the shares. As a prominent player in the Specialty Retail industry with a "GOOD" overall financial health score according to InvestingPro, the company maintains strong market presence with a $375 billion market capitalization. The revision followed Home Depot’s first-quarter performance, which showed comparable sales slightly down by 0.3%, affected by inconsistent weather and a continued slump in large-scale projects. The average ticket size remained flat, and comparable transactions fell by 0.5%. Foreign exchange rates also presented a 70 basis point headwind to comparable sales growth.
The company’s adjusted earnings before interest and taxes (EBIT) margin of 13.2% was 20 basis points below the consensus, and the adjusted earnings per share (EPS) of $3.56 missed estimates by 3 cents. With a robust gross profit margin of 33.3% and impressive revenue of $163 billion over the last twelve months, Home Depot continues to demonstrate operational strength. Despite the quarter’s results, Home Depot reaffirmed its fiscal year 2025 guidance, which Bernstein had previously considered conservative. For deeper insights into Home Depot’s financial metrics and 8 additional exclusive ProTips, visit InvestingPro. The guidance includes organic sales growth from Home Depot’s subsidiary SRS Distribution in the second half of the year but does not account for potential sales increases from SRS’s ongoing acquisitions.
Home Depot’s management has set a target of reducing exposure to any single country to less than 10% within 12 months, though risks persist in the short term. The company, with roughly 50% import exposure, is expected to face challenges related to tariffs, including cost absorption or passing increases onto consumers, despite efforts to mitigate impacts through supplier negotiations and product re-specification.
Looking ahead, the company expects comparable sales growth of 1.0%, net sales growth of 2.8%, a gross margin of 33.4%, an adjusted EBIT margin of 13.4%, and an adjusted EPS of $14.94. These figures are largely in line with consensus estimates, except for an adjusted EPS that is slightly below the consensus of $15.00. Notable strengths include the company’s 39-year streak of maintaining dividend payments, with a current dividend yield of 2.4%. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, suggesting careful consideration for new positions. Bernstein notes that while recent easing of tariff tensions reduces some risks, high mortgage rates around 7% and limited consumer spending power could dampen demand for home improvement. Additionally, the potential impact of tariffs on prices may affect customer traffic.
In conclusion, Bernstein anticipates that Home Depot’s comparable sales growth will not reach above 3% until fiscal year 2027, given the current uncertainties and absence of clear market catalysts. For comprehensive analysis including detailed valuation metrics, growth projections, and expert insights, access Home Depot’s full Pro Research Report, available exclusively on InvestingPro.
In other recent news, Home Depot reported its Q1 2025 earnings, revealing a revenue of $39.9 billion, surpassing the forecast of $39.25 billion. However, earnings per share (EPS) slightly missed expectations, coming in at $3.56 compared to the projected $3.59. The company reaffirmed its annual guidance for 2025, anticipating total sales growth of approximately 2.8% and a slight decline in diluted EPS by about 3%. Analyst firms have been active in adjusting their outlooks on Home Depot. Mizuho (NYSE:MFG) Securities reduced its price target to $435 from $450 while maintaining an Outperform rating, citing a positive surprise in U.S. comparable sales. Telsey Advisory Group upheld its Outperform rating with a $455 price target, noting mixed challenges and strengths in the first quarter. DA Davidson also lowered its price target to $450 from $470 but maintained a Buy rating, emphasizing Home Depot’s stable results and potential benefits from an improved economic environment. Additionally, KeyBanc Capital Markets retained a Sector Weight rating, acknowledging the potential for recovery but cautioning about high long-term interest rates and the company’s current high valuation.
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