XLY - Home Depot: Too Pricey With A Tough Consumer Backdrop (Rating Downgrade)
2024-05-16 21:04:23 ET
Summary
- A sluggish residential real estate market affects major home-improvement retailers and homeowners' intentions to invest in big-project upgrades.
- Home Depot's Q1 revenue missed expectations, but management reiterated FY 2024 guidance.
- A delayed spring selling season was cited for the mixed start to the year.
- HD's valuation is not all that compelling, but the company remains a free cash flow generator with an above-market dividend yield.
- I highlight key price levels to watch on the chart following a steep pullback from its March high.
A sluggish residential real estate market from the perspective of transaction volume and folks moving about the country emerges as a bearish trend for major home-improvement retailers. Homeowners spent excess savings from the pandemic on household upgrades years ago, now, as people generally sit tight in their dwellings, there is less need to spend a Saturday driving back and forth to Home Depot (HD). At least that’s the narrative the bears spin today. ...
Home Depot: Too Pricey With A Tough Consumer Backdrop (Rating Downgrade)