Skip to Content
Stock Analyst Update

Rocky Road Ahead for Home Depot Shares

Latest earnings release is good but not good enough.

Mentioned:

Even though Home Depot (HD) continues to execute on its aggressive expansion plans, its stock, which currently trades at about $55, leaves no room for error. Investors would do well to hold off on buying until the stock falls below $50.

Home Depot released results Tuesday for the quarter ended July 30 that met analyst expectations of $0.36 cents a share. The gains were driven by 41 store openings in the quarter and improved gross margins owing to better supplier sourcing and an expanded tool-rental program. But although sales grew 22% to $12.6 billion, they were a bit softer than expected. Last quarter, sales grew 24%, and investors were expecting as much this quarter.

Mark Sellers does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.