Earnings Previews: Home Depot,, Walmart

Premarket trading Friday had all three major U.S. indexes trading in the green. Six of the 11 S&P sectors closed higher on Thursday, led by communications services (up 1.1%). The tech sector, which closed down 1%, was the day’s biggest loser.

After markets closed Thursday, Affirm posted a smaller-than-expected per-share loss and also beat the consensus revenue estimate. User numbers rose sharply, as did transactions. Shares traded about 23% higher in mid-morning action Friday.

Toast reported a larger-than-expected per-share loss but a near-90% year-over-year increase in revenue that beat estimates by more than 10% and raised guidance for the second quarter and the full fiscal year more than made up for the loss. The stock traded up about 12% Friday morning.

Algonquin Power reported earnings in line with expectations and a 16% year-over-year increase in revenue that beat consensus estimates by around 3.4%. Shares traded 3.2% higher Friday morning.

Joby Aviation posted a loss per share of $0.11, less than the expected loss of $0.24. The electric aircraft developer also reported cash, equivalents and short-term investments totaling $1.2 billion. The stock traded up nearly 20% Friday morning.

Here is a look at two major U.S. retailers and one Chinese e-commerce giant due to report results first thing Tuesday morning.

Home Depot

Home Depot Inc. (NYSE: HD) has dropped about 10.5% from its share price over the past 12 months. Since posting a recent high in early December, the stock has dropped by nearly 30%. Between March 20, 2020, and December 6, 2021, Home Depot’s stock added almost 185%, truly phenomenal for a Dow Jones industrial.

Even with the decline over the past several months, the shares are trading for essentially double their March 2020 price. Expectations will be lower (the average price target has dropped by about 11%), and investors will be looking for a solid beat on both profits and revenue.

Of 33 analysts covering the stock, 24 have a Buy or Strong Buy rating and eight rate the shares at Hold. At a recent price of around $290.90 a share, the upside potential based on a median price target of $377.00 is nearly 30%. At the high price target of $470.00, the upside potential is 61.6%.

Analysts expect Home Depot to report revenue of $36.65 billion for its first quarter of fiscal 2023, which ended in April. That would be up 2.6% sequentially but down about 2.3% year over year. Adjusted earnings per share (EPS) are forecast at $3.68, up 14.8% sequentially and 4.7% lower year over year. For the full fiscal year, EPS are forecast at $16.12, up 3.8%, on sales of $153.9 billion, up 1.8% year over year.

Home Depot stock trades at 18.1 times expected 2023 EPS, 16.8 times estimated 2024 earnings of $17.31 and 15.7 times estimated 2025 earnings of $18.55 per share. The stock’s 52-week trading range is $280.63 to $420.61, and the low was posted Thursday. Home Depot pays an annual dividend of $7.60 (yield of 2.62%). Total shareholder return for the past year is negative 8.5%.

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