Home Depot (HD -0.66%) missed earnings expectations, but the company's sales came in stronger than expected.
Investors aren't sure what to think of the results. Shares of Home Depot traded up as much as 3% early in the day, but were down 1% at 1 p.m. ET.
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Holding serve in a tough environment
This is a tough time to be in the home improvement and construction business. Higher interest rates and macro uncertainty are limiting home sales and home improvement projects, softening demand for the products Home Depot sells.
The retail giant earned $3.56 per share in the quarter, $0.03 short of expectations, on revenue of $39.9 billion. The sales number was about $600 million more than analysts had expected and represents 9.5% year-over-year growth.
"Our first quarter results were in line with our expectations as we saw continued customer engagement across smaller projects and in our spring events," CEO Ted Decker said in a statement.
Home Depot reiterated full-year guidance for total revenue growth of about 2.8% and comparable-store sales growth of 1%.
The company did not repurchase any shares during the quarter, but it continues to pay a dividend that is currently yielding 2.4%. Over the past five years, Home Depot has reduced its share count by more than 7%.
Is Home Depot stock a buy?
The market's up-and-down reaction to the quarter seems fitting. In one sense, Home Depot can do little but accept mediocre growth until the macro environment changes. But in another sense, the stock has been a long-term winner, and there is no reason to believe that Home Depot won't benefit as demand for its products improve.
Despite the headwinds, Home Depot is priced just 12% below its all-time high. That's likely an indication that investors understand the issues the company is facing. But it also means Home Depot is not selling at bargain prices.
Home Depot is a great option for long-term-focused investors. But those hoping for a big pop when the economy recovers could end up being disappointed.
