Home Depot (HD)

Last quarter, Home Depot posted an earnings beat driven by shoppers revamping their homes. Shares fell ~2.5% after the company cemented pandemic pay raises and failed to provide guidance.

Heading into its Q4 report, investors are wondering: are consumers still working on their homes, and how is Home Depot performing vs. peers?

1. Home Renovation mentions remain elevated (+11% YoY), alongside other key macro trends in the last month.

While mentions did not hold the initial lockdown boom pace, the fact that consumers are still picking up home projects bodes well for the retailer.

Consumer macro trends like building a house (+42% YoY) and buying a home (+14% YoY) are also serving as tailwinds for the company.

2. Home Depot is outperforming competitor Lowe's by 10 points in the last month.

What is Home Depot doing right?

Digital fulfillment.

Digital fulfillment mentions (including curbside pickup, delivery, buy-online-pickup-in-store) increased +42% YoY in last quarter (this is 12 points higher than LOW digital mentions in same time frame, +30% YoY). Metrics for both companies represent a significant improvement QoQ, suggesting traction with consumers.

We'll be watching demand as weather conditions warm up and spring projects begin...