Home Depot (HD) Full-Year Guidance Cut: Market Impact & Risk Analysis

On 2025-11-18, Home Depot (HD) announced a full-year 2025 guidance cut citing sluggish housing market conditions, consumer uncertainty, and lack of storm-related demand [5]. The guidance revisions include slightly positive comp sales and a ~5% decline in adjusted diluted EPS [4]. Q3 results showed revenue beat ($41.4B, +2.8% YoY) but EPS miss ($3.74 adjusted, -1.06% YoY) [4]. HD’s stock closed at $336.48 with a 6.02% 1-day decline [1], underperforming the Consumer Cyclical sector which dropped -0.93858% [2]. Trading volume was 10.14M shares, above recent averages [0].

• HD’s stock underperformed its sector significantly post-guidance cut [1][2].
• Analyst consensus remains positive with an average price target of $420 (+24.8% upside) [1], but short-term metrics like ROE (1.56% [1]) and inventory turns (4.5x [4]) signal risks.
• The Pro segment and acquisitions (SRS, GMS) are key long-term growth drivers [4], but current inventory buildup ($2.3B YoY increase [4]) may lead to margin compression.

1. Profitability Risk
   : Low ROE (1.56% [1]) indicates inefficient equity usage.
2. Inventory Risk
   : Slower turns (4.5x vs prior 4.8x [4]) could lead to markdowns.
3. Earnings Pressure
   : 5% full-year adjusted EPS decline [4] and housing market headwinds [5].

• Long-term upside from market share gains via Pro segment investments and acquisitions [4].
• Analyst consensus target suggests potential 24.8% upside [1].

HD’s guidance cut reflects short-term challenges from housing and consumer uncertainty. While long-term analyst outlook remains positive, investors should monitor inventory management, housing metrics, and acquisition synergies. The stock’s 6.02% 1-day drop [1] and sector underperformance highlight immediate market reaction, but underlying growth drivers like Pro segment expansion may support recovery over time.