Home Depot Posts First Earnings Growth In 2 Years: Shares Up Despite Disappointing Guidance

Home Depot, the world's largest home improvement retailer, reported its fourth quarter and fiscal 2024 results today, posting its first earnings growth in two years. The company's shares rose despite providing disappointing guidance for 2025. Here's a closer look at the key takeaways and what they mean for investors.

Strong Q4 Results

Home Depot's fourth quarter sales grew by 14.1% year-over-year to $39.7 billion, driven by a 14th week in the quarter that added approximately $2.5 billion in sales. Comparable sales increased by 0.8%, with U.S. store comps rising 1.3%. Adjusted diluted EPS for the quarter was $3.13, a 9.4% increase year over year.



Disappointing Guidance for 2025

Despite the strong Q4 results, Home Depot's shares initially fell after the company provided disappointing guidance for 2025. The company expects total sales growth of approximately 2.8%, with comparable sales growth of approximately 1.0% for the comparable 52-week period. Adjusted EPS is expected to decline by about 2% from $15.24 to $14.94.

The primary reasons behind the disappointing guidance include slowing new home sales and higher mortgage rates, which are likely to impact home improvement demand. Additionally, uncertain macroeconomic conditions and a higher interest rate environment may further impact demand.



What's Next for Home Depot?

Home Depot's strategic initiatives and investments in 2024 contributed significantly to its performance, with greater engagement in home improvement spend despite ongoing pressure on large remodeling projects. The company's prospects for continued success in 2025 are supported by its expectations for a reversion to growth, better-than-expected earnings, and sustained capital returns.

However, the company must address the challenges posed by slowing new home sales, higher mortgage rates, and uncertain macroeconomic conditions. By focusing on marketing to existing homeowners, diversifying its product offerings, and offering competitive financing options, Home Depot can work to maintain its market position and continue to grow despite the headwinds.

In conclusion, Home Depot's strong Q4 results and first earnings growth in two years are a positive sign for the company's future. However, the disappointing guidance for 2025 highlights the need for the company to address the challenges posed by the current economic environment. By taking proactive measures to adapt to these challenges, Home Depot can work to maintain its market position and continue to grow.