Home Depot stock falls after profit and sales beat expectations but full-year outlook was affirmed

Shares of Home Depot Inc.
HD,
-2.55%
slumped 0.7% in premarket trading Tuesday, even after the home improvement retailer reported fiscal third-quarter earnings that beat expectations, citing strength in project-related categories, but kept its full-year outlook intact. Net income for the quarter to Oct. 30 rose to $4.34 billion, or $4.24 a share, from $4.13 billion, or $3.94 a share, in the year-ago period. That beat the FactSet consensus for earnings per share of $4.12. Total sales grew 5.6% to $38.87 billion, above the FactSet consensus of $37.95 billion, while same-store sales growth of 4.3% topped expectations for a 3.1% rise. Cost of sales increased more than total sales, rising 5.7% to $23.65 billion, as gross margin contracted to 34.0% from 34.1%. Merchandise inventories of $25.72 billion was down 1.4% from the end of July but up 25.0% from a year ago. For 2022, the company affirmed its guidance for sales growth of “approximately” 3.0% and for EPS growth in the mid-single digits percentage range. The FactSet 2022 EPS consensus of $16.60 implies 6.9% growth. Home Depot’s stock has slipped 2.4% over the past three months through Monday, while the SPDR Consumer Discretionary Select Sector ETF
XLY,
-1.59%
has dropped 16.5% and the Dow Jones Industrial Average
DJIA,
-0.63%
has eased 1.1%.