Home Depot Q2 Earnings May Not Be Enough to Halt Declining Stock Price

Home Depot's stock price has been steadily declining this year, down over 2% year-to-date. The company is set to release its Q2 earnings on August 18, with a consensus estimate of $4.72 per share in earnings (EPS) and $47.4 billion in revenue - representing a nearly 10% increase in top-line growth but under 1% bottom-line growth.

Despite the expected revenue boost, options traders don't believe that Home Depot's Q2 earnings will be enough to reverse its current trend. The put-to-call ratio on contracts expiring August 21 is currently at 2.06, a reading above 1.00 that typically indicates bearish sentiment.

The technical setup also suggests continued downward momentum for the stock, as it has slipped below its 50-day moving average (MA) and the derivatives market has set a lower price target of $325, signaling a potential 3.4% decline through August 21.

One reason for this pessimism is the ongoing weakness in the US housing market, with high mortgage rates freezing home turnover and reducing discretionary spending on renovations. While contractor sales have provided some cushion, DIY retail traffic remains soft due to lower-income consumers prioritizing essentials over big-ticket projects.