Analysts Bullish on Home Depot Ahead of Earnings, Despite Comparable Sales Slump

As Home Depot (NYSE: HD) prepares to report its fourth-quarter earnings on Tuesday, February 25, analysts are largely bullish on the home improvement retailer's stock, despite expecting another quarter of declining comparable store sales. The company is projected to report adjusted earnings per share (EPS) of $3.02 for the final quarter of 2024, along with sales of $39.06 billion, up from $34.79 billion a year ago. However, analysts also forecast that Home Depot's comparable store sales will have declined 1.66% year-over-year, marking the ninth consecutive quarter of decline.

Analysts who follow Home Depot and are tracked by Visible Alpha are mostly bullish on the home-improvement giant's stock, with eight "buy" ratings, along with three "hold" and one "sell." The retailer has an average price target of about $433, about 10% above the stock's level on Thursday afternoon. JPMorgan analysts, for instance, expect Home Depot to top fourth-quarter estimates, forecasting comparable sales growth of 0.8%. Given the retailer's "three long years" since its last positive comparable sales result in the third quarter of 2022, the analysts said they expect Home Depot to be conservative in its projections for 2025.



Despite the expected decline in comparable store sales, analysts remain optimistic about Home Depot's overall financial performance and market position. The company's continued investments in its Pro Ecosystem, digital capabilities, and store improvements are expected to yield benefits and drive growth. Additionally, the acquisition of SRS and the expansion of the MRO business through the tie-up with HD Supply have provided cross-sale opportunities and competitive advantages, contributing to analysts' bullish sentiments.

However, some analysts have a more cautious stance, with one "sell" rating and three "hold" ratings. These analysts may be concerned about the ongoing decline in comparable store sales, macroeconomic uncertainty, and the impact of inflation on big-ticket items. Nevertheless, the majority of analysts remain bullish on Home Depot's stock, with an average price target that predicts an increase of 10.30% from the current stock price of $393.42.

In conclusion, analysts' expectations for Home Depot's earnings and comparable store sales reflect the company's recent performance and industry trends, with declining comparable store sales and relatively lower EPS growth compared to the broader market. Despite these challenges, analysts remain largely bullish on Home Depot's stock, citing the company's investments in its Pro Ecosystem, digital capabilities, and strategic acquisitions as key drivers of growth. As Home Depot reports its fourth-quarter earnings, investors will be watching closely to see if the company can buck the trend of declining comparable store sales and maintain its strong financial performance.