Home Depot (NYSE:HD) stock is experiencing some volatility today after the company reported better-than-expected second-quarter financial results but lowered its full-year sales and profit guidance. The retailer cited “higher interest rates and greater macroeconomic uncertainty” as factors affecting its performance.

Home Depot’s Q2 Results and Guidance Cuts

The company’s revenue for the last quarter increased by 0.7% to $43.2 billion, surpassing analysts’ expectations. Earnings per share stood at $4.67, in line with Q2 of 2023. However, sales at comparable stores declined by 3.3% year-over-year.

Home Depot now anticipates a 3% to 4% decline in comparable sales for the year, compared to its previous outlook of a 1% decrease. The company also expects a 1% to 3% drop in EPS for the full year, down from its previous estimate of a 1% increase.

Home Depot’s Cautious Comments

CEO Edward Decker noted that higher interest rates and macroeconomic uncertainty have dampened consumer demand for home improvement projects, leading to weaker spending. The rising U.S. unemployment rate could further impact the company’s outlook.

HD Stock: Reasons for Optimism

Despite the challenges, interest rates have declined in recent weeks, with the U.S. 10-year bond rate dropping from 4.67% to 3.86%. Additionally, investment bank DA Davidson upgraded its rating on HD stock to “buy” from “neutral,” expecting the company to benefit from lower interest rates.

While Home Depot’s shares have remained relatively stable this year, they have decreased by 6% in the last month.

Overall, the company’s strong Q2 results and revised guidance reflect the impact of economic factors on its performance. Investors should consider these updates when making decisions about their portfolios.

Source: Jonathan Weiss / Shutterstock.com

Shares: