Often grouped as industry peers, Tractor Supply and HD Supply have been tumbling this week after an earnings whiff and lowered guidance, but there is no reason to suspect that Home Depot will fall next.
On Wednesday Home Depot's Atlanta-based neighbor, HD Supply, fell short of quarterly earnings expectations after booking non-adjusted earnings per share of $0.51, 20% below consensus forecasts, while sales of sales of $2 billion also missed estimates by about 1%. Shares promptly fell about 15%.
And now on Thursday shares of Tractor Supply fell about 16% after the home improvement retailer cut its sales guidance. Now for the full year, Tractor Supply expects sales to clock in at range of between $6.7 billion and $6.75 billion, down from prior estimates of $6.8 billion to $6.9 billion.
The moat protecting Home Depot? On one hand, the home-improvement market that Home Depot primarily caters to does not have substantial overlaps with Tractor Supply's roughly 15,000 U.S. stores primarily focused on meeting the demands of recreational farmers and ranchers, primarily in rural areas.
And on the HD Supply front, in which there are more meaningful overlaps, the disappointments in HD's earnings results do not reflect end-market demand. In fact, management was clear to point out on a Wednesday earnings call that its views on demand for its home-improvement products this year are unchanged since earlier this summer.