Dow Giant Slides On Sales Miss, Higher Wage Costs Hit Outlook

Home Depot (HD) turned in mixed fiscal fourth-quarter results Tuesday before the open and guided low. HD stock sank despite a dividend hike.

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Home Depot Earnings

The home improvement retailer posted earnings per share of $3.30 vs. FactSet consensus expectations for $3.28. It reported revenue of $35.83 billion vs. $35.97 billion expected.

Year over year, Home Depot earnings rose 2.8% and revenue edged up 0.3%.

“Our ability to deliver growth on top of the $40 billion of sales growth achieved over the prior two-year period, while navigating persistent inflation, ongoing global supply chain disruptions, and a tight labor market, is a testament to investments we have made in the business,” Home Depot CEO Ted Decker said in Tuesday’s earnings release.

The company plans an “additional approximately $1 billion in annualized compensation for frontline, hourly associates,” which is expected to weigh on margins.

For fiscal 2023, the Dow Jones retail giant expects EPS will decline in the “mid-single digits.” It’s guiding for flat sales and comparable-sales growth.

Wall Street had forecast Home Depot earnings per share to be roughly flat vs. 2022 while sales edged up 0.4%.

HD Stock, LOW Stock

Shares fell 3.6% to 306.50 in premarket action on the stock market today. HD stock closed Friday just below the 50-day moving average, which has flattened since January. Home Depot stock also sits just under the 21-day exponential moving average.

Rival Lowe’s (LOW), which reports next week, gave up 2.7% early Tuesday.

Home Depot’s board approved a 10% dividend hike to $2.09 per share, Tuesday’s release added. That takes the annual dividend to $8.36 per Home Depot share, which translates to a 2.63% yield based on Friday’s closing price.

Home improvement retailers were Covid pandemic winners. More recently, they found favor as defensive plays amid inflation and global recession fears. They had rallied in recent months among with other housing-related plays as mortgage rates came off highs. But borrowing costs have been trading higher again.

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