Home Depot, Dow’s biggest stock of 2021, is off to a rough start this year

Home Depot shares fell 24% on fears of an eventual rate hike by the Federal Reserve, hurting housing market and consumer spending. Mortgage rates Already starting to climb.
Fears of a housing slowdown may be exaggerated: Home Depot (HD) Fourth-quarter earnings and revenue reported Tuesday beat Wall Street expectations, with profits up 17% and sales in stores open at least a year to 8.1%.

The home improvement retail giant also announced a 15% increase in its quarterly dividend to shareholders and issued a cautious, but mostly optimistic forecast for 2022. Home Depot said it expects sales growth to be “slightly positive” and that earnings will grow in low single digits.

The stock is down 9% Tuesday morning, though…largely due to more cautious guidance.

“While we are encouraged by the consistent and resilient demand we have seen for home improvement, there remains broader uncertainty regarding the impact of inflation, supply chain dynamics and how consumer spending will evolve during the year,” said Home Depot’s chief financial officer. Richard McPhail on a conference call with analysts.

But CEO Craig Miner said in an earnings press release that the 2021 results were “a testament to the investments we’ve made in the business, our ability to execute with agility, and our partners’ tireless focus on our customers.”

This is the last quarter of Meniere’s tenure as CEO of Home Depot. Meniere, who has been president of the company since November 2014, will step down as CEO on March 1 but will remain chairman of the board. Longtime Chief Operating Officer of Home Depot, Ted Decker, He succeeds Meniere as CEO.
Meniere’s period was profitable for Home Depot investors. The stock is up more than 255% since November 2014, handily outperforming both Standard & Poor’s 500 (SPX) and A broader index of retail stocks (XRT) during that time. Home Depot is not behind the competition Louie (a little)anyway.

Lowe’s, which will report its latest earnings Wednesday morning, is up about 290% since November 2014. Lowe’s, now run by Home Depot and former JCPenney CEO, outperformed Home Depot slightly in 2021 as well. Lowe’s shares were down 4% on Tuesday.

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In addition to stiff competition, Home Depot also has to deal with the impact that inflation and supply chain concerns are having on consumers’ wallets.

While higher prices for wood, copper and other housing materials are helping to boost sales, some shoppers may start to cut back on spending due to inflation.

“Demand from regular consumers is now somewhat more volatile than it was during the height of the pandemic,” Neil Saunders, managing director of GlobalData, said in a report on Tuesday.

“Most people are still fairly committed to spending on their homes, but the number of projects they want to take on and the amount of money they are willing to commit to future home improvement is less certain than it was a year ago,” Saunders added. .

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