Trading Home Depot After Q2 Performance

August 24, 2023 21:20

Home Depot is an American multinational retail company that focuses on home improvement products and services. This includes the sale of construction equipment, tools, appliances and more.  

It is the largest retailer dedicated to home improvement in the United States and operates more than 2,300 stores across the US, Canada and Mexico.  

Learn more about Home Depot's second-quarter performance and what the analysts are forecasting for the stock.

Stock: The Home Depot
Symbol for Invest.MT5 Account: HD
Date of Idea: 22 August 2023
Time Line: 1 - 6 months
Entry Level: $338.50
Target Level: $384.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose, as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Home Depot Q2 2023 Performance

Here are some of the key highlights from the latest second-quarter earnings report from Home Depot: 

  • Earnings per share of $4.65 vs $4.45 expected 
  • Revenue of $49.92 billion vs $42.23 billion expected 
  • 2% year-on-year decline in sales but better than expected 3.9% decline 
  • $15 billion in share buybacks announced 

Home Depot beat analyst expectations on both earnings and revenue, marking the first time in the last three quarters that it beat revenue expectations. However, it also recorded a year-on-year drop in sales of 2%.  

Chief Financial Officer Richard McPhail stated that there is caution from consumers in purchasing big-ticket items. Most of these were made during the pandemic with higher interest rates now causing consumers to wait.  

While the data shows that the typical amount spent by a consumer has decreased, it also noted that the number of shopping transactions is rising. On top of this, supply chain disruptions from the Covid pandemic have now normalised.  

The concern for investors is the potent mix of a weaker housing market, high inflation and higher borrowing costs due to rising interest rates. If these trends continue, then consumers may forego the bigger ticket items at Home Depot, thereby affecting the company's revenue.  

In the earnings call, the management team highlighted this could be the case as it reiterated its weaker forecast for the year. When analysing consumer-related stocks, it's worthwhile also researching the macroeconomic environment as this can have a big impact on consumer spending habits and corporate profits.  

Home Depot Stock Forecast - What do the Analysts Say?

According to analysts polled by TipRanks for a Home Depot stock forecast in the past 3 months, there are currently 15 buy, 8 hold and 0 sell ratings on the stock. The highest price level for a Home Depot stock forecast is $384.00 with the lowest price target at $276.00. 

The average price target for a Home Depot stock forecast is $342.48.

Source: TipRanks, 22 August 2023


An Example Trading Idea for the Home Depot Stock Price

An example trading idea for the Home Depot share price could be as follows:  

  • Buy the stock on a break above the post-earnings high at $338.50 to allow for volatility. 
  • Target just below the highest analyst price target of $384.00. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 Home Depot shares:  
    • If target is reached = $455.00 potential profit [($384.00 - $338.50) * 10 shares].

Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering how sensitive consumer stocks can be to economic fluctuations.

Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.

With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Home Depot stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy Home Depot Stock in 4 Steps  

With Admirals, you can buy shares in companies like Home Depot with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the dashboard.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock in the search window at the top right to view the live price chart. 
  4. Click Create New Order from the bottom of the screen to open the trading ticket. 
Source: Admirals MetaTrader 5. Home Depot. Monthly. Date: Nov 2013 to Aug 2023, captured on 22 Aug 2023. Past performance is not a reliable indicator of future results or future performance.


Click on the banner below to trade Home Depot stock today! ▼▼▼ 

Do You See the Home Depot Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.

If you believe there is a higher chance Home Depot share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.

This means you can trade long and short to potentially profit from rising and falling stock prices.


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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.