Home Depot reported a very good quarter, executing well on things it can control, despite what CFO Richard McPhail called "frozen housing conditions." The Club stock rose modestly in Tuesday's down market. Revenue for Home Depot's second quarter advanced 5.7% year over year to $47.86 billion, outpacing the $47.27 billion expected by LSEG. Earnings per share (EPS) increased 5.1% to $4.92, exceeding the LSEG-compiled $4.73 estimate:
The July quarter ended Aug. 2. Same-store sales, or comps, increased 1.7% versus the year-ago period, nearly double the 0.9% estimate from FactSet and almost triple first-quarter comps of 0.6%:
Shares of Home Depot are almost back to breakeven in a year marked by soaring bond yields, which have kept mortgage rates high and the housing market stalled. While a recent surge in 30-year Treasury yields to highs not seen in nearly two decades will likely cap further near-term upside in Home Depot:
We think that low ought to mark the bottom. Factor in a Home Depot price-to-earnings multiple toward the lower end of its three-year range and a solid dividend yield of about 2.75%, we think now is a good time to accumulate shares:
We're upgrading the stock to our buy-equivalent 1 rating and raising our price target to $370 from $360:
