Home Depot plunges in premarket on weak financial outlook

Home Depot Inc. (HD.US) shares fell over 4.0% before the opening bell after the home improvement retail giant posted disappointing sales figures and issued cautious guidance.

• Company earned $3.30 per share, up 2.8%  YoY, topping market estimates of $3.28 per share.

• Revenues were essentially flat from last year at $35.83 billion, slightly below analysts' estimates of  $35.97 billion.

• Comparable sales dropped 0.3% in Q4, while analysts' expected 0.56% increase.

Highlights of Home Depot Q4 2022 results. Customer transaction trend, which is a key sales metric, fell sharply in the latest quarter. On the other hand average tickets rose 6.0% per trip to $90.05, even as the number of individual transactions slowed by around 6%. Source: Alpha Street

• Management now expects sales and comparable sales to be flat year-over-year in FY23 with diluted EPS expected to decline in “mid-single digits” percentage.

• The company plans to invest an additional $1 billion in annualized compensation for its frontline, hourly associates, starting from the first quarter of 2023.

• "Fiscal 2022 was another record year for The Home Depot as our team continued to successfully execute in a challenging and dynamic environment," said CEO Ted Decker. "Our ability to deliver growth on top of the $40 billion of sales growth achieved over the prior two-year period, while navigating persistent inflation, ongoing global supply chain disruptions, and a tight labor market, is a testament to investments we have made in the business, as well as our associates' relentless focus on our customers."

Home Depot Inc. (HD.US) stock fell to lowest level since November following release of latest quarterly figures. Break below 200 SMA (red line) would pave the way towards major support at $280.60, which coincides with 50.0% Fibonacci retracement of the upward wave started in March 2020. Source: xStation5