At the moment, Home Depot (HD) is a great opportunity for shorts.
On Tuesday, shares were down about $11.05 a share, or about 3.8%. And unfortunately, it’s now below March support. From a current price of $277.38, it could drop to triple bottom support last tested in October 2022. Not only did the company watch revenue plummet, but it cut its guidance and blamed the weather, lumber, and consumers.
Granted, the company did beat EPS by two cents. But demand is in the toilet. Sales were 2.7% below Street expectations – its biggest miss since November 2022. Also, according to CNBC, “It is also the second straight revenue miss for the home improvement retailer – which follows 12 straight revenue beats. It’s also the biggest revenue drop since the financial crisis (revenue down 4.2% YOY in the latest quarter). Comps came in down 4.5% vs. down 1.6% consensus estimate with transactions falling 4.8% and average ticket basically flat (slightly positive).”
That’s just bad all around.
While we’d typically say to buy the fear, we can’t even do that right now. All because things aren’t getting better. The company also cut its FY EPS guidance and revenue growth projections because of soft demand, and consumer uncertainty. With that, the company now sees full-year revenue down 2%-5% vs. the down 0.7% consensus estimate and EPS down 7%-13% vs. the down 5.7% consensus estimate.
If you want to trade Home Depot right now, a short or a put may be your best bet.
Sincerely,
Ian Cooper
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