To The Moon

$Home Depot(HD)$ is scheduled to report its fiscal third-quarter 2025 results on November 18, 2025, before the market open (BMO). Consensus Expectations The general consensus suggests a modest increase in the top and bottom lines year-over-year, but concerns remain about the pace of discretionary spending. Key Trends and Challenges The quarter is expected to reflect mixed consumer behavior influenced by the current economic environment: Strength in Pro Segment: Home Depot's professional (Pro) customer segment, which deals with larger projects, is expected to remain a key growth driver, supported by the "One Home Depot" strategy and recent acquisitions like GMS. DIY & Big-Ticket Weakness: Demand for high-ticket discretionary items (e.g., kitchen/bath remodels, major appliances) for Do-It-Yourself (DIY) customers remains soft. Elevated interest rates are still seen as discouraging financing-dependent, larger-scale projects. Comparable Sales (Comps): This is a critical metric. The model prediction for comps is a modest increase of , driven by a mix of higher average tickets (due to inflation and high-value purchases) and a small increase in transactions. Margin Pressure: Ongoing macroeconomic pressures, including higher interest rates (impacting financing costs) and costs associated with integrating new acquisitions (like SRS and GMS), are expected to keep gross and operating margins relatively flat year-over-year. Home Depot (HD) Fiscal Q2 2025 Earnings Summary and Lessons Home Depot released its fiscal Q2 2025 earnings on Tuesday, August 19, 2025, reporting results that generally showed resilience amid ongoing macroeconomic uncertainty, particularly by reaffirming its full-year guidance. Here is a summary of the key financial results and the core lessons learned from the company's guidance. Key Financial Highlights (Q2 2025) Performance Breakdown The results revealed a nuanced picture of the home improvement market: Small Projects Drive Growth: CEO Ted Decker noted that the momentum from the back half of the prior year continued, driven by customers engaging more broadly in smaller home improvement projects. Pro Segment Strength: The professional (Pro) customer segment remained a key strategic priority and performed well, supported by continued investment and the integration of acquisitions like SRS Distribution. Big-ticket transactions (over $1,000) also saw modest growth (). DIY & Discretionary Weakness: The decline in total customer transactions and the modest comparable sales growth confirm that large, discretionary DIY projects (like full kitchen or bath remodels) continue to be deferred by homeowners due to high interest rates, high home prices, and overall economic uncertainty. Lessons Learned from HD's Q2 2025 Guidance Despite missing analyst consensus on the top and bottom lines, Home Depot's stock was generally supported by the reaffirmation of its full-year fiscal 2025 guidance. The key lessons from this decision are: 1. The Strategy is Pivoting from DIY to Pro The Lesson: Home Depot is confirming that its future growth engine is the Pro customer, and it is willing to sacrifice short-term margin (via investments) to capture this market share. Guidance Fact: HD reaffirmed its Total Sales Growth of and Comparable Sales Growth of for the full year. Implication: This conservative guidance signals that management does not anticipate a significant rebound in the broader housing or DIY market in the second half of the year. The expected growth is primarily predicated on the performance of the Pro segment and contributions from recent acquisitions (like SRS) that target specialized, high-value trade professionals. 2. Market Stability is Valued Over Growth Acceleration The Lesson: In the current macro environment, stability and predictability are highly valued by investors, even if the absolute growth rate is low. Guidance Fact: HD maintained its outlook despite the minor Q2 earnings miss. This suggests management believes the slowdown has bottomed out or stabilized and that the worst is over. Implication: By holding guidance steady, Home Depot signaled confidence in its ability to manage the current environment—specifically, that the Pro and smaller-project momentum is strong enough to offset the persistent drag from the deferral of large, rate-sensitive discretionary projects. 3. Margin Pressure is the Cost of Strategic Investment The Lesson: Investors must accept that margins will be pressured as the company prioritizes long-term strategic investment (Pro ecosystem, supply chain) over short-term profitability. Guidance Fact: HD guided for Diluted EPS to decline and Adjusted EPS to decline from the prior year. Implication: This decline is partly due to the extra week in the prior fiscal year, but also signals that the costs associated with beefing up its "One Home Depot" Pro capabilities, integrating acquisitions, and enhancing the customer experience are impacting the bottom line. It's a trade-off: investments for market share today mean lower EPS tomorrow, but better long-term positioning. Key Metrics Investors Should Watch The headline EPS and Revenue figures are important, but investors need to look deeper to gauge the health of the business and future guidance. Home Depot (HD) Price Target Based on 26 Wall Street analysts offering 12 month price targets for Home Depot in the last 3 months. The average price target is $440.42 with a high forecast of $497.00 and a low forecast of $370.00. The average price target represents a 21.54% change from the last price of $362.36. Short-Term Trading Opportunities Post-Earnings Trading HD post-earnings is inherently high-risk, as the stock typically sees high volatility. The market's reaction will likely hinge on the Comps figure and the Full-Year Guidance, rather than just beating or missing the EPS consensus. Implied Volatility (IV): Options trading suggests an expected price move of approximately following the earnings report. This is the magnitude of move the market is pricing in. The Bearish Case (Potential Downside): Comps Miss: If comparable sales fall short of the modest expectations, it would signal a continued, and perhaps worsening, deferral of home improvement projects due to interest rates and general uncertainty. Guidance Cut: A significant cut to full-year guidance for sales or comps would confirm the slowdown is deeper or longer than anticipated. The Bullish Case (Potential Upside): Strong Comps Beat: A comps figure significantly better than would suggest demand (especially from the Pro segment) is accelerating despite macro pressures. Guidance Maintained or Raised: Reaffirming or raising the full-year outlook would suggest management is confident in a near-term rebound, especially as interest rates potentially ease. Given the recent analyst downgrade to "Hold" due to a "weakening home-improvement outlook" and the stock trading slightly above its fair value estimate, the market may be sensitive to any negative surprise, potentially leading to a sharp downside move if the news is poor. A short-term trading strategy would require waiting for the release and analyzing the context of the numbers, particularly the guidance and comps breakdown, to determine if the stock over- or under-reacts to the news relative to the expected move. Technical Analysis - Exponential Moving Average (EMA) We are seeing Home Depot share price experiencing a downward movement, this is amidst the recent market pullback, as investors are focus to look at continued strength in the Pro segment, HD is heavily investing in, to offset persistent weakness in high-ticket, discretionary DIY projects (like large remodels) deterred by elevated interest rates and economic uncertainty. So if this segment does show some positive outlook in recovery or can provide some results that it is picking up, we might see a sharp recovery of HD’s share price, but if HD outlook remains cautious in view of elevated interest rates and economic uncertainity, then we could see further downside to HD share price. Summary Home Depot (HD) is expected to report its fiscal Q3 2025 earnings on November 18, 2025, before the market opens. Analyst consensus forecasts modest growth, with Revenue projected at approximately $41.1 Billion (up 2.1%) and EPS at around $3.82 (up 1.1%). Key Investor Focus Metrics: Comparable Sales (Comps): This is the most crucial metric. Analysts anticipate a modest +2.1% increase, driven primarily by higher average tickets and the Pro segment, rather than a significant rebound in customer transactions. Pro vs. DIY Demand: Investors will look for continued strength in the Pro segment, which HD is heavily investing in, to offset persistent weakness in high-ticket, discretionary DIY projects (like large remodels) deterred by elevated interest rates and economic uncertainty. Full-Year Guidance: The update to the fiscal 2025 sales and EPS guidance will be the main catalyst for post-earnings stock movement. Maintaining or raising the existing, conservative guidance would signal management confidence and likely support the stock. Short-Term Trading Opportunity: The stock is sensitive to surprises. Given recent analyst downgrades citing sector stagnation, a miss on the Comps or a cut to the full-year guidance could trigger a sharp downside move. Conversely, a strong Comps beat or reaffirmed guidance would be viewed positively. The options market implies a price move of roughly 4.5%. Appreciate if you could share your thoughts in the comment section whether you think Home Depot could provide continued strength in the Pro Segment as HD is heavily investing in, to offset persistent weakness in high-ticket, discretionary DIY projects (like large remodels) deterred by elevated interest rates and economic uncertainty. @TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts. Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.