With Jerome “Too Late” Powell finally budging in the direction of rate cuts, even if the notion of further rate cuts looks imperiled, the idea that retail and home improvement operations might get a boost is on the table. Home improvement giant Home Depot (HD) is getting a similar look. But will this tepid rate cut be enough to spark sales? Some are questioning the idea, and Home Depot shares slipped fractionally in Monday afternoon’s trading.
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The traditional narrative started firing up for Home Depot as soon as the rate cut was announced. But this was underscored by the results that came out of Home Depot’s second quarter. Sales were already on an upward trend even before Powell brought out the rate cut, up 4.9%, and comparable store sales were up 1%. Momentum was regarded as “broad across all categories,” reports noted.
Big-ticket transactions—items priced over $1,000—were up 2.6% for the quarter as well, and stores were already noticing a certain amount of hesitancy when it came to making those purchases. Thus, it became easy to wonder if a rate cut would unlock some of that hesitancy and translate it into further purchases for Home Depot. Economic uncertainty is still the key cause behind customer delay on big purchases, and with reduced interest rates, some of that uncertainty may boil off.
Another Home Depot Doggo
Meanwhile, a new report emerged about yet another Home Depot dog out to check out the store. This time, it’s a Golden Retriever pup named Otis, who hit the cart for a ride around the store. A running “good boy” counter kept track of his progress at exercising restraint and remaining in the cart.
Otis has been something of a social media figure since he was eight weeks old, and this kind of content helps endear dog owners to Home Depot. It works fairly effectively as a background marketing tool, and might well encourage some shoppers to make a stop in their local store as well, with or without their dog.
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 19 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 6.05% rally in its share price over the past year, the average HD price target of $447.50 per share implies 8.6% upside potential.
