What Happened?
Shares of home improvement retail giant Home Depot (NYSE: HD) fell 5% in the afternoon session after the company reported third-quarter results that failed to impress investors.
The company's revenue of $41.35 billion was in line with Wall Street's expectations, but its adjusted earnings per share (EPS) of $3.74 missed the consensus estimate of $3.83. This profit miss was a key point of concern for the market. Additionally, same-store sales, which measure performance at stores open for at least a year, were flat year-on-year. While this was an improvement from previous declines, the lack of growth from its mature stores combined with the earnings miss contributed to the negative sentiment around the stock.
The shares closed the day at $337.45, down 5.9% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Home Depot? Access our full analysis report here.
What Is The Market Telling Us
Home Depot’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 4% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Home Depot is down 13.2% since the beginning of the year, and at $337.37 per share, it is trading 21.8% below its 52-week high of $431.37 from December 2024. Investors who bought $1,000 worth of Home Depot’s shares 5 years ago would now be looking at an investment worth $1,250.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free for active Edge members and will only take you a second.
