PreMarket Prep Stock Of The Day: Home Depot

In this turbulent macroeconomic environment, not much else really matters. So much so that a good earnings report from Home Depot Inc. HD really does not matter to investors.

The negative price action in the issue following its fourth-quarter report makes it the PreMarket Prep Stock of the Day.

Home Depot's Rough Year: Home Deport made its all-time high in December at $420.61 and backed off to end the year at $415.01. The issue spent very little time above its year-end close, peaking on the first trading of the year at $417.84 and has been under selling pressure ever since.

In fact, the issue ended last week at its lowest closing level for the year ($346.87). While the S&P 500 index is still above its yearly low, with Monday’s price action, the issue is well below its previous yearly low ($344.10).

At its current price of $320, it is in the red for the year by 23% and the index is off by 9.4%.

Home Depot's Q4 Beat: Before the opening, the company reported quarterly earnings of $3.21 per share, which beat the analyst consensus estimate of $3.17 by 1.26%. The company reported quarterly sales of $35.7 billion, which beat the analyst consensus estimate of $34.87 billion by 2.38%. In addition, the company was raising its quarterly dividend from $1.65 to $1.90 per share.

No formal guidance was provided, but the company forecasts FY22 sales growth and comparable sales to be “slightly positive.”

PreMarket Prep's Take On Home Depot: When the issue was being covered on the show Tuesday, it was trading in the red at the $338 area. As producer Spencer Israel revealed the numbers, co-host Dennis Dick commented: “They did everything right and it had a huge rally.”

He continued: "But looking at the macro environment, we still have a lot of issues going on.”

The author of this article noted that the issue was making a new low for the year and it was difficult to identify major support. It was mentioned that based on the monthly charts, there was no identifiable support until the area of three monthly lows, July-September, in the range of $316.61 to $324.16.

HD Price Action: After a much lower open ($335.09 vs. $348.87), it had a brief rally to $336.46 and then continued its drastic move lower, falling below the monthly lows. The stock was down 9.46% at $313.80 Tuesday afternoon. 

The discussion on the issue from Tuesday’s show can be found here: