Home Depot actions show signs of life as optimism accumulates for a reduction in interest rates at the Federal Reserve meeting next month. The next test is the profits. The club’s action, which is one of the 30 names that make up the Dow Jones industrial average, is having its best month of the year, even with the slide of more than 1% of Mondays. The profit report on Tuesday before the opening bell, however, will highlight the real commercial performance of the retailer and can determine where the actions go here. They have earned almost 7.5% so far in August. “Home Depot, the company, is not working well. Home Depot, the shares are on fire,” said Jim Cramer during our monthly meeting of August last week. “It is an action that needs lower rates,” Jim added, to reduce mortgages and domestic capital loans. HD YTD Mountain Home Depot YTD and, the lowest rates are, in fact, what the market expects from the Fed, with a probability of more than 80% of a September cut, according to the CME Fedwatch tool, and at least one more at the end of the year. The mortgage rates, which have followed the treasure performance to 10 years to the south since the end of May, reached their lower levels since the end of October 2024. Until last Thursday, the 30 -year -old fixed rate mortgage was 6.58%, according to Freddie Mac, the Federal Mortgage Mortgage Corporation. Below 6.5% for the age of 30, it has been seen historically as a level that stimulates housing activity, which Home Depot needs as a housing builders, contractors and homeowners who carry out their own renewal projects. “We have seen the last two weeks, as the probabilities of rate reduction improve, what could happen,” said Jeff Marks, director of Club portfolio analysis. The real estate market has stagnated due to those high prices of high -mortgage housing and rates. The latter is especially punitive because many people secured super low rates during Covid, who keep them. During the slow activity of DIY clients, Home Depot has been taking measures to strengthen their business aimed at professionals. Last year, Home Depot acquired SRS Distribution, a leading provider of roofs and construction materials, in an agreement of $ 18.25 billion. The home improvements giant then doubled this year, with a successful offer of $ 4.3 billion to acquire GM in June. “We believe that the SRS platform has established a firm base to capitalize on the PRO complex that is working well,” Stifel analysts wrote in a client note on Sunday. The professional segment complex in the home improvement industry refers to large -scale projects managed by contractors. Analysts added: “We see the potential acquisition of GMS positively with a modest synergy potential with HD taking advantage of its financial strength to invest behind favorable long -term construction trends in the midst of difficult industry conditions.” In addition to listening to more details about the GMS transaction and the integration of the SRS, investors on Tuesday will take a look at spring and summer sales of Home Depot, a period that Jim has called the Christmas of Home Depot. As my colleague Kevin Stankiewicz wrote in a preview of profits during the weekend, “the market is looking for an increase in sales in the same store throughout the 1.3% company in the quarter of July, according to Factset. That would mark a significant acceleration of the fall of 0.3% observed in the period from February to February. In a few words, although encouraged by the action of the price of home. Actions are coming to the impression of profits on Tuesday, which Jim often said it makes it cautious. ” We are not playing the business, “he added. We can get a clue on the rates before the Fed meeting next month. On Friday, the chief of the Fed, Jerome Powell, will go to the annual conspiracy of the central bank in Jackson Hole, Wyoming. Cramer will receive a commercial alert before Jim makes an exchange. of responsibility.
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