Home Depot Reports Blowout Earnings Amid Housing Boom

Comparable-store sales surged by 31%

Assistant Editor
May 18, 2021 at 10:46 AM
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Home improvement retailer Home Depot Inc's (NYSE:HD) latest trip to the earnings confessional is having little impact on the equity, last seen up 0.2% to trade at $320.77 this morning. However, the Dow Jones Industrial Average (DJI) is benefitting, jumping in part thanks to the blue-chip component's first-quarter earnings of $3.86 on revenue of $37.5 billion, both of which handily beat Wall Street's projections. What's more, the company saw a 31% surge in comparable-store sales, fueled by a booming housing market and an interest in home improvement projects amid stay-at-home orders. Home Depot did, however, withhold its outlook for fiscal 2021. 

On the charts, Home Depot stock faced pressure at the $285-$290 ceiling for much of 2020, but finally overcame that ceiling in March. Since, the equity has carved out a channel of higher highs, which lead to its May 10, all-time peak of $345.69. Of late, the equity has pulled back, and pressure is looming overhead at the 30-day moving average. HD is at risk of logging its third-straight loss today, but remains up 20% in 2021.

Meanwhile, the equity is seeing a post-earnings options barrage, today. Already, over 16,000 calls and 10,000 puts have crossed the tape, which is triple what's typically seen at this point. The May 325 and 330 calls are most popular by far, meaning call traders see plenty of upside for Home Depot stock by the time these contracts expire at the end of the week.

Bearish bets, meanwhile, have been all the rage over the last 10 weeks. This is per HD's 50-day put/call volume ratio of 1.02 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all other readings from the past 12 months, indicating a much healthier-than-usual appetite for puts of late.

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