Fast Money Blog- 8/19/22

This was a great week for earnings!

Over the past five trading days Wall Street saw two stocks in the home improvement sector release earning reports.

On Tuesday, August 16th, The Home Depot, Inc. (HD) released their Q2 2022 earning results. The company reported revenue of $43.8 billion, an increase of 6.5% year-over-year. This top-line revenue was the highest quarterly sales and earnings in the company’s history. Comparable sales for the 2nd quarter increased 5.8% year-over-year.

While Home Depot said it saw 3% fewer customer transactions in the quarter compared to a year ago, the average customer ticket rose 9% year-over-year mostly due to higher prices.

What amazes me is how well Home Depot is doing in this rising interest rate environment.

On Wednesday, August 17th, Lowe’s Companies, Inc. (LOW) released their Q2 2022 earning results. Lowe’s top-line revenue in the second quarter was $27.5 billion, falling .34% from $27.6 billion during Q2 2021. Transaction volume was down 6% year-over-year but the average ticket price rose 6.5% partially due to inflation.

Comparable sales in the U.S. rose .2% while comparable sales in North America decreased .3%

Lowe’s has a different customer mix than Home Depot, which tends to be made up of home professionals. Lowe relies more heavily on do-it-yourself customers, which has made it more vulnerable to shifts in demand due to Covid, which drove do-it-yourselfer’s to take on more home improvements.

If you didn’t know the difference between the customer mix, here’s what you need to know:

Home Depot tends to be made up of home professionals, whereas Lowe’s relies more heavily on do-it-yourself customers. This is what has made Lowe’s more vulnerable to shifts in demand due to Covid, which drove do-it-yourselfer’s to take on more home improvements.

That said, both stocks are good dates and make great trades and long-term investments.

Also on Wednesday, August 17th the Federal Reserve released the meetings from their July meeting, showing that even though they’re intent on curbing inflation, they agree on the need to eventually slow down the pace of interest-rate hikes. Wall Street reacted positively as they anticipate a lower interest-rate hike than the last one.

I expect the next 3 weeks to have its share of volatility, but for the market, overall, to continue in an upward trend.