Home Depot's Profit Squeeze
Home Depot's stock price dropped by 2.9% following its Q2 earnings report, despite revenue growth and increasing demand for home improvement products.
The company reported adjusted earnings per share of $4.92 on total revenue of $47.9 billion, with comparable sales up 1.7%. However, operating margin sat at 14.3%, down from 14.8% a year ago, and return on invested capital slipped to 24.8%.
Analysts are concerned about the squeeze on margins and returns, as well as rising capital expenditures and high debt levels.
The company's Pro ecosystem and digital investments were highlighted as key growth drivers, with online comp sales up 11% and over 65% of parcel orders shipped same or next day. However, these initiatives also contributed to the pressure on margins.