Home Depot Q2 Earnings Preview: Analysts Expect Modest Declines in Sales and Profits
Key Takeaways
- Home Depot reports earnings Tuesday before markets open.
- Analysts expect modest declines in sales and profits from the same time last year, as inflation-weary consumers have pulled back on big-ticket home improvement projects.
- Home Depot closed its acquisition of SRS Distribution in the quarter, as the retailer looks to increase its market share among professional contractors.
Home Depot (HD) reports earnings Tuesday morning, with analysts projecting slight declines in revenue and profits amid a pullback in discretionary consumer spending.
Analysts expect Home Depot’s second-quarter sales to come in at $42.57 billion, edging down from $42.92 billion a year ago. Net income is projected to drop to $4.48 billion, compared to $4.66 billion in the second quarter of fiscal 2023.
A pullback on big-ticket spending by inflation-weary consumers putting off home improvement projects has impacted the last several quarters for Home Depot, as well as competitors like Lowe’s (LOW).
| Analyst Estimates for Q2 2024 | Q1 2024 | Q2 2023 | |
| Revenue | $42.57 billion | $36.42 billion | $42.92 billion |
| Diluted EPS | $4.52 | $3.63 | $4.65 |
| Net Income | $4.48 billion | $3.6 billion | $4.66 billion |
Key Metric: Guidance
After Home Depot affirmed its full-year guidance in its first-quarter report, JPMorgan analysts said the retailer could join other companies lowering their guidance this earnings season.
“Given the uneven backdrop and the prospect of the election and shortened holiday season, we expect guidance reductions to broadly continue, in varying degrees,” JPMorgan analysts wrote about the retail industry.
However, the analysts said there’s “no panic to slash investment” in Home Depot, suggesting the retailer could have the flexibility to manage its expenses effectively to weather macroeconomic uncertainty.
Business Spotlight: SRS Distribution Deal, Pro Market Share
Home Depot could also provide updates on its $18.25 billion acquisition of SRS Distribution, a specialty distributor that works with contractors in the roofing and pool markets, among others. The deal was announced in March, and Home Depot said it closed in June, after initially projecting it to close by the end of fiscal 2024.
The retailer has emphasized increasing its market share among professional contractors, especially with big-ticket spending by consumers under pressure. In the company’s first-quarter earnings call, executives said the SRS deal would complement their existing pro sales ecosystem, widening Home Depot’s accessible market of professionals.
Home Depot shares were little changed from the start of the year at $346.26 as of 10 a.m. ET Friday.
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