Home Depot and Target: Third Quarter Results and Expectations

Home Depot (HD) stock declined on Tuesday morning following mixed third-quarter results and a lowered full-year forecast. This became a notable situation in the retail sector.

In the retail field, Target (TGT) will reveal its quarterly results on Wednesday, and during this process, experts are focusing on the significant challenges Target is facing. Lee Munson, president and chief investment officer of Portfolio Wealth Advisors, is providing insights on Target's competition with other retail giants. Additionally, the challenges that Home Depot faced in a weak housing market and the slowdown in home improvement projects are summarized by Yahoo Finance senior reporter Brooke DiPalma.

Watching Jessica Ramirez from The Consumer Collective explain how Walmart (WMT) has leveraged the advantages that Target used to have also offers an important perspective.

Target catches my attention when a well-managed company has a weak quarter because if the best company in the sector is facing such an issue, think about the situation of other companies struggling in the industry.

Home Depot is known as one of the best retail companies that set the rules of trade. However, Target delivered disappointing performance that frustrated investors and customers. As the company's income report is released on Wednesday morning, disappointing results are expected. Factors contributing to this situation include consumers being more cautious with their spending and the prices of daily necessities still being high.

Additionally, Target is losing out in price competition with Walmart, resulting in a loss of customers. Wall Street's perspective is cautious; many analysts are rating Target as neutral or sell. The company's stock has lost 35% of its value this year, but analysts still do not see it as undervalued.

Lee Munson, while evaluating the situation, notes that sales have declined and same-store comparisons have fallen. Munson emphasizes that there is zero interest in Target and that the declining sales need to revive. He highlights that the company is facing challenges due to political pressures and general executive issues.

On the other hand, while evaluating Home Depot’s results, Brooke mentions that the company hoped for an improvement in housing demand, but this did not materialize. Executives expressed that their hopes for increased demand in the second half have been dashed. Economic uncertainty and pressures in the housing market negatively impact housing demand. This situation led the company to lower its fiscal year forecasts.

Particularly, it remains a major question whether consumers will turn to Home Depot during the holiday season and make new purchases. Wall Street did not expect this quarter; especially after the sales growth experienced in August.