Will Appliances & Building Materials Keep Momentum?

Home Depot’s Q2 sales are expected to grow 5.4% YoY, driven by appliance and building material sales, fueled by Pro customer demand. The retailer’s first-quarter results showed six of 16 merchandising departments posted positive comps, with appliances and building materials standing out. Seasonal factors and replacement cycles may boost these categories in Q2, balancing softer discretionary spending. Earnings are due Aug. 19.

Home Depot, Inc. (HD) is poised to report a 5.4% year-over-year (YoY) increase in sales for the second quarter of fiscal 2025, according to analyst estimates. This growth is expected to be driven primarily by the appliance and building material categories, which have shown resilience in the first quarter despite broader macroeconomic pressures [1].

In the first quarter, six of Home Depot’s sixteen merchandising departments posted positive comparable sales (comps), with appliances and building materials standing out. These categories were significantly boosted by the Pro customer segment, which outperformed DIY shoppers and drove demand for core products such as gypsum, decking, and concrete [1].

Seasonal factors and ongoing replacement cycles are expected to provide a lift in the second quarter, as summer typically brings heightened demand for construction, repair, and upgrade projects. Additionally, competitive promotions aimed at value-conscious consumers may further stimulate demand for these categories [1].

Investors will be closely watching the retailer’s earnings report, scheduled for Aug. 19, to see if appliance and building material sales can serve as a stabilizing force for Home Depot’s overall results. The Zacks Consensus Estimate for Home Depot’s second-quarter sales implies a 5.4% YoY growth, while the same for earnings per share suggests a marginal increase of 0.9% [1].

From a valuation standpoint, Home Depot trades at a forward price-to-sales ratio of 2.29, higher than the industry’s 1.62. The retailer carries a Value Score of C, reflecting a premium positioning compared to peers like Lowe’s Companies Inc. (LOW) and Floor & Decor Holdings, Inc. (FND) [1].

Institutional investors have shown confidence in Home Depot, with several hedge funds and other institutional investors increasing their holdings in the company. For instance, Biltmore Family Office LLC boosted its holdings by 76.2% during the first quarter, while other investors like Navigoe LLC, Abound Financial LLC, Iron Horse Wealth Management LLC, Quarry LP, and Quest 10 Wealth Builders Inc. also increased their stakes in the retailer [2].

Home Depot’s stock has performed well over the past year, rising 10.7% compared to the industry’s growth of 6.4%. The company’s market capitalization stands at $385.80 billion, with a price-to-earnings ratio of 26.31 and a PEG ratio of 3.69. The retailer’s debt-to-equity ratio is 5.95, and its current and quick ratios are 1.09 and 0.28, respectively [2].

Wall Street analysts have largely maintained a positive outlook on Home Depot, with seven analysts rating the stock with a hold rating, twenty analysts assigning a buy rating, and one analyst giving a strong buy rating. The consensus rating is “Moderate Buy” with a consensus price target of $426.77 [2].

References:
[1] https://finance.yahoo.com/news/appliance-building-material-sales-keep-135000437.html
[2]