The backtest shows that HD's earnings misses resulted in mixed short and long-term returns, with a 50% win rate at 3 and 30 days but a 0% win rate at 10 days. The average returns were slightly negative at -0.01% for 3 days, -1.35% for 10 days, and -0.31% for 30 days, indicating modest downside pressure. This suggests that while the immediate market reaction is uncertain, there is a mild negative trend over a 10-day period. Investors should be cautious and consider the potential short-term weakness following earnings misses for HD.

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The backtest results show no significant impact on the Specialty Retail Industry following earnings misses, with a maximum return of -0.36% observed on the event day. This indicates that earnings misses did not materially affect the price performance of stocks in this sector over the three-year period. Consequently, the data suggests that investors should not expect pronounced negative price movements in the Specialty Retail Industry solely based on earnings misses. This insight highlights the potential resilience or market indifference of this sector to such earnings surprises.

The backtest results show that The Home Depot's earnings miss negatively impacted the Distributors industry with sustained declines over 24 days, while the Construction and Engineering industry experienced a positive response lasting 28 days. This divergence reflects weaker retail demand hurting distributors directly, contrasted with ongoing construction activity supporting suppliers in construction-related sectors. The market overall showed a gradually improving trend despite the earnings miss, suggesting a nuanced investor reaction.

This analysis highlights that earnings misses can have varied sector impact, with some benefiting from underlying industry dynamics even amid negative retail signals.

Investors should consider defensive positioning in Distributors and potential opportunities in Construction and Engineering following similar earnings disappointments.

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Backtest HD Earning Missed Expectations

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