Key Highlights

  • Home Depot shares were trading up 5.99% at $353.63, against a prior close of $333.66.
  • The 10-year Treasury Yield eased to near 4.9%, and Crude Oil fell more than 8%.
  • Homebuilders gained roughly 8% in the same session.
  • The market Capitalization is $352.81 billion, with a forward P/E of 22.47.
  • Third-quarter results are due on November 17.

Falling Yields and Oil Revive the Housing Trade

Home Depot (NYSE:HD) shares were trading up 5.99% at $353.63 on Wednesday, leading a rally in housing-sensitive stocks. The move came after Democrats won control of both the House and the Senate, with the Dow Jones Industrial Average up about 2.9% and the S&P 500 up about 1.8%. Trading Volume was heavy, and the stock retraced a pullback from Tuesday’s session.

Rate relief did most of the work. The 10-year Treasury yield eased to near 4.9%, and crude oil dropped more than 8% on hopes for US-Iran peace talks. Investors took both moves as raising the odds of lower Mortgage rates, which could revive home purchases and renovation projects. Lowe’s (NYSE:LOW) also traded higher, and homebuilders gained roughly 8%.

Stalled Housing Turnover Keeps the Recovery Case Unproven

The backdrop is still difficult. Management has described home sales turnover as stalled, and a few days of easier rates do not change that on their own. Today’s jump is a bet on direction, not a sign that Demand has returned.

Home Depot has also been building its Business with professional contractors, adding Interline Brands, HD Supply and SRS, a roofing, landscape and pool distributor, to its network of roughly 2,360 warehouse-format stores across the US, Canada and Mexico. That mix gives it exposure to trade customers as well as homeowners. The average analyst price target sits near $375, about 6% above the current price.

Valuation After the Jump: 22.5 Times Forward Earnings and a 2.63% Yield

Home Depot has a market capitalization of $352.81 billion. The stock trades at 22.47 times forward earnings and 24.70 times trailing earnings, on trailing EPS of $14.57. The Dividend Yield is 2.63%.

Even after today’s gain, the shares sit about 11.1% below their 52-week high of $397.63 and about 27.6% above the 52-week low of $277.15. That leaves the stock well off its peak, which helps explain why rate-sensitive buyers are moving quickly when yields ease.

November 17 Earnings Report Is the Next Test

The third-quarter report on November 17 will show whether stalled turnover is hurting results and how management sees demand heading into next year. Investors will also look for updates on its professional customer business.

Until then, the stock is likely to track mortgage rates and Treasury yields. Today’s move came on lower yields and cheaper oil, and a Reversal in either could take back some of the gain.