Home Depot Earnings: Tough Macro Environment Weighs on Sales Momentum, but Our Long-Term View Intact

After incorporating wide-moat Home Depot’s tepid first-quarter results and tempered 2023 guidance (now calling for a 2%-5% decline in comparable sales and a 7%-13% drop in diluted EPS from flat and a mid-single-digit decline, respectively), we plan to trim our $267 per share fair value estimate by a low-single-digit percentage, in line with the market’s reaction on the print. Still, shares appear a tad overvalued (trading at a roughly 5% premium to our existing valuation), and as such, we’d suggest investors remain on the sidelines.