Home Depot Shares Face Headwinds Amid Earnings Miss and Lowered Outlook

Home Depot US4370761029

The home improvement retail giant Home Depot finds its stock navigating turbulent waters. Investors, grappling with a recent quarterly earnings disappointment and a reduced full-year forecast, are now looking ahead to the company's upcoming strategy presentation for clearer directional signals.

For its third fiscal quarter of 2025, Home Depot reported revenue of $41.35 billion, a figure that modestly exceeded market expectations. However, the company's earnings per share (EPS) of $3.74 failed to meet the consensus estimate of $3.83. A key retail metric, comparable sales, showed a concerningly weak increase of just 0.2%, falling significantly short of the anticipated 1.3% growth. Management attributed this softness to an unusually mild storm season, which dampened demand in crucial product categories.

In response to these results, the corporate leadership revised its guidance for fiscal 2025 downward. The projected EPS is now approximately $14.48, representing a decline of about 5% compared to the prior year and below the previous consensus expectation of $15.00.

Wall Street's Divergent Perspectives

Analyst sentiment currently reflects a landscape of uncertainty. While the average rating remains a "Buy" with a price target above $400, more cautious voices have emerged. The investment bank Stifel recently downgraded the stock from "Buy" to "Hold," slashing its price target from $440 to $370. Analysts cited growing concerns over a potential economic cooldown in the home improvement sector. In contrast, Evercore ISI maintains a bullish "Outperform" rating with a $450 price target.

Regulatory Scrutiny and Future Catalysts

Beyond operational challenges, Home Depot is under increased regulatory scrutiny. An investigation is underway to determine whether misleading statements were made in connection with the quarterly results. Attention now pivots to the company's Investor and Analyst Conference scheduled for December 9, 2025. The market anticipates this event will provide greater clarity on Home Depot's long-term strategic initiatives and its initial outlook for 2026.

Despite the present headwinds, the company continues its commitment to shareholder returns, having recently paid a quarterly dividend of $2.30 per share. The stock, trading with a year-to-date loss of roughly 18% and well below its 52-week high, underscores the current pressures testing the resilience of the home improvement market.