Q4 Earnings Overview
Home Depot (HD) reported improved Q4 results, with revenue rising 14% year-over-year to $39.7 billion. Adjusted earnings per share (EPS) reached $3.13, beating analyst estimates. Notably, same-store sales turned positive, growing 0.8% overall and 1.3% in the U.S., marking a rebound in core demand after multiple quarters of declines.
2025 Outlook: Cautious Guidance
Despite the strong Q4 performance, management issued a modest outlook for fiscal 2025. The company anticipates total sales growth of approximately 2.8%, comparable sales growth of around 1%, and a 2% decline in adjusted EPS. This caution reflects uncertainties in consumer spending patterns and macroeconomic headwinds.
Housing Market Dynamics
Home Depot’s performance remains closely tied to the housing market. Elevated mortgage rates (near 7%) have shifted consumer behavior toward smaller, necessity-driven home improvement projects rather than large renovations. However, deferred projects could resume once rates stabilize, offering potential upside. Regional disparities persist, with stronger sales in areas experiencing job growth and population inflows.
Technical Price Pattern Warning
However, Home Depot’s stock is showing signs of a potential Head-and-Shoulders Top pattern near the critical 200-day moving average (MA200), a key technical support level. This pattern’s validity could be reinforced by recent sideways-to-slightly-down trends in housing prices, which may weigh on investor sentiment and amplify downside risk. A sustained break below MA200, especially amid weakening housing market momentum, could trigger a deeper selloff, making this a critical level to monitor.
Conclusion
Home Depot’s Q4 results demonstrate resilience, driven by rebounding same-store sales and disciplined execution. However, its cautious 2025 guidance highlights ongoing challenges from macroeconomic uncertainty and housing market volatility. While stabilizing mortgage rates could unlock pent-up demand for renovations, near-term risks remain, particularly the stock’s precarious technical setup, now compounded by sluggish housing price trends. Investors should watch for a decisive break below MA200 as a potential bearish signal, while balancing long-term optimism with short-term prudence.
