Home Depot’s shares slide despite upbeat sales

Today’s headlines

What’s happening: Shares of The Home Depot fell on Tuesday, after the company released its third-quarter results.

What happened: The world’s largest home improvement retailer posted higher-than-expected sales for the quarter, while its earnings missed market estimates.

Home Depot also lowered its 2025 earnings outlook, exerting pressure on the stock.

How were the results: The Atlanta, Georgia-based company reported single-digit sales growth for the quarter.

• Sales rose 2.8% year-over-year to $41.4 billion, topping consensus estimates of $41.137 billion.
• Adjusted diluted earnings fell to $3.74 per share from $3.78 per share last year, missing Wall Street expectations of $3.85 per share.

Why it matters: High mortgage rates resulted in homeowners focusing on necessary repairs and avoiding big-ticket remodelling. Ongoing consumer uncertainty and pressure in the housing market weighed on home improvement demand.

Home Depot’s total revenues in the quarter included around $900 million in sales from the GMS acquisition. The company’s comparable sales climbed 0.2%, while US comp sales rose only 0.1%.

Customer transactions fell 1.4% to 393.5 million, while the average ticket size rose 2% to $90.39 in the latest quarter.

The main drivers of demand, such as appreciation in home prices and housing turnover are “pressured,” CEO Ted Decker said.

Management raised their forecast for 2025 sales to $164.299 billion, from their previous guidance of $163.980 billion. However, they lowered their guidance for GAAP earnings to $14.02 per share, from their previous forecast of $14.46 per share. The company also cut its adjusted earnings outlook to $14.48 per share, from the prior projection of $14.94 per share.

How shares responded: Home Depot’s shares fell 6% to close at $336.48 on Tuesday, following the release of quarterly results. The stock has remained under pressure this year, down more than 13% year to date amid higher interest rates and weak demand for big home improvement projects.

What to watch: Investors will continue monitoring the overall economic environment in the US, which is expected to significantly impact home improvement demand.

The markets today

The Canadian dollar in focus today ahead of a basket of major economic reports

Context: The CAD/USD forex pair edged higher this morning amid a surge in crude oil prices.

Details: Data released on Tuesday showed housing starts in Canada declined by 17% year-over-year to 232,765 units in October, representing the lowest rate in seven months. Among the major urban areas, Toronto’s housing starts tumbled by 42%, while those in Vancouver dipped 36%, offsetting the 104% jump recorded in Montreal.

Higher prices of crude oil, one of Canada’s major exports, provided a boost to the loonie. WTI crude oil prices gained 1.3% to $60.67 per barrel this morning.

Weakness in the US dollar lent further support to the CAD/USD pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, slipped to 99.58 this morning.

The CAD/USD forex pair edged higher to 1.3989 this morning, after adding around 0.5% on Tuesday. The S&P/TSX Composite Index declined 0.13% to close at 30,036.46 on Tuesday.

What to watch: With no major economic data scheduled for release today, investors await reports on CFIB business barometer, PPI and raw materials prices on Thursday. Canada’s CFIB Business Barometer long-term index, which declined 3.9 points to 46.3 in October, is expected to rise to 48 in November.

Analysts expect Canada’s industrial producer prices to rise by 1.3% in October, following a 0.8% gain in September. The raw materials price index is expected to surge by 1.8% in October, after a 1.7% gain in September.

Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.07%, 0.83% and 1.20%, respectively.

The news shaping the markets

Russia gained ground in the Zaporizhzhia region, the southeastern Ukrainian city. The news sent the RUB/USD pair higher in forex trading this morning.

New Zealand’s producer input prices rose by 0.2% in the September quarter, following 0.6% growth in the previous quarter, lending support to the NZD/USD forex pair.

Colombia’s GDP expanded by 3.6% year-over-year in the third quarter, accelerating from 2.1% growth in the previous quarter, which sent the COP/USD pair slightly higher in forex trading this morning.

Chile’s economy expanded by 1.6% year-over-year in the third quarter, easing from the 3.3% growth recorded in the previous quarter. The latest reading coming in below market expectations of 1.9% exerted pressure on the CLP/USD forex pair.

Hong Kong’s unemployment rate declined to 3.8% in the three months ending October, compared to a three-year high of 3.9% in the previous period. However, the HKD/USD pair edged lower in forex trading this morning.

What else to watch today

European Central Bank’s non-monetary policy meeting (1200 UAE Time), Eurozone’s current account (1300 UAE Time), inflation rate (1400 UAE Time), labour cost index (1400 UAE Time), 12-month Bill auction (1510 UAE Time), 3-month Bill auction (1510 UAE Time) and 6-month Bill auction (1510 UAE Time), South Africa’s inflation rate (1200 UAE Time) and retail sales (1500 UAE Time), UK’s Treasury Gilt 2035 auction (1300 UAE Time), Italy’s current account (1400 UAE Time), US MBA mortgage applications (1600 UAE Time), balance of trade (1730 UAE Time), EIA crude oil stocks change (1930 UAE Time), EIA gasoline stocks change (1930 UAE Time), EIA Cushing crude oil stocks change (1930 UAE Time), EIA distillate stocks change (1930 UAE Time), EIA heating oil stocks change (1930 UAE Time), 17-week Bill auction (2030 UAE Time), 20-year Bond auction (2200 UAE Time) and FOMC minutes (2300 UAE Time), Russia’s PPI (2000 UAE Time), Canada’s 5-year Bond auction (2100 UAE Time), as well as Argentina’s balance of trade (2300 UAE Time).