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Home Depot Slips On Second Warning In A Month As Payoff On This Bet Unclear NEWS Home Depot Slips On Second Warning In A Month As Payoff On This Bet Unclear Home Depot (HD) stock slipped after the firm forecast fiscal 2020 sales growth below Wall Street expectations. The Dow Jones company also said it expects slimmer margins amid continued investments. The home improvement retail giant forecast preliminary fiscal 2020 sales growth of 3.5%-4%, while analysts had expected 4.3% growth. Home Depot also sees 2020 operating margins narrowing 40 basis points to 14%, below the Wall Street consensus for 14.6% as well as the firm's target for 14.4%-15% The weak 2020 outlook comes just a month after Home Depot trimmed 2019 views. It now sees revenue up 1.8% and same-store sales up 3.5%, down from prior views for 2.3% revenue growth and a 5% comps gain. But CEO Craig Menear continued to be bullish on Wednesday. He believes the program of store enhancements, improved IT, and new e-commerce solutions and distribution infrastructure will pay off in the long run. "We are confident that the investments we are making in the 'One Home Depot' experience will address the evolving needs of our customers," the executive said in a news release. "We are building on our distinct competitive advantages to capitalize on a large and fragmented market opportunity and extend our leadership position for years to come."Home Depot Stock SlipsShares were down 1.9% at 211.85 on the stock market today. Home Depot stock is below its 50-day line, but found support at its 200-day moving average. The relative strength line for Home Depot stock has been sliding since mid-October. Among rivals in the Retail/Wholesale-Building Products Industry Group, Lowe's (LOW) was up 0.3%, and top-ranked Floor & Decor (FND) jumped 3%. Home Depot stock plunged Nov. 19 on huge volume, diving below its 50-day moving average on a disappointing earnings report. Home Depot stock has a mediocre IBD Composite Rating of 77, and it has been declining of late. Earnings are solid, which is reflected in its EPS Rating of 81, but its poor recent stock market performance is a cause for concern. 'One Home Depot' Returns UnclearWedbush Securities analyst Seth Basham said Wednesday the majority of the margin declines are due to "elevated" investments in the "One Home Depot" initiative. The analyst currently rates Home Depot stock as neutral with a 230 target. "HD has been one of the most forward-thinking retailers, investing in these areas for years, and is 'confident' that the investments it is making to support its interconnected One Home Depot experience will address evolving needs of its customers and build on distinct competitive advantages that will enable market share gains and extend leadership over the next few years," Basham said in a research note. "That said, we believe that since the company is not providing a three-year financial outlook as it has at recent analyst meetings, it is more difficult to see returns on the investments it is making." |
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