Retail Stocks Under Pressure: Can Home Depot Weather the Storm Comparisons in Q4?

The retail home improvement sector faces a perfect storm—literally. With storm-sensitive categories taking a back seat, Home Depot (HD), Lowe’s Companies (LOW), and Floor & Decor Holdings (FND) are all grappling with the same structural demand reset heading into the fourth quarter of fiscal 2025.

The Common Enemy: Absent Storm Activity

Here’s the uncomfortable truth for Home Depot and its peers: last year’s fourth quarter benefited from major rebuild demand tied to significant weather events. This year? Radio silence on the storm front. Management explicitly flagged this challenge, noting that October saw a 1.5% dip in comparable sales directly linked to the absence of storm-driven repair demand in categories like roofing, power generation, and plywood.

The dynamic gets worse in Q4. The upcoming quarter will lap an even stronger prior-year period when rebuild activity was in full swing. That means Home Depot now expects fiscal 2025 comparable sales to be only slightly positive, down from its earlier 1% growth forecast. The Zacks Consensus Estimate pins fourth-quarter revenues at $38.18 billion, implying a decline of nearly 4% year-over-year.

A Sector-Wide Struggle

Home Depot isn’t alone in this predicament. Floor & Decor posted a 1.2% decline in third-quarter comparable store sales, with management repeatedly emphasizing that the hard-surface flooring market remains in a trough amid uncertain demand recovery. Meanwhile, Lowe’s managed just 0.4% comparable sales growth, hampered by consumer anxiety and persistent pressure on big-ticket discretionary purchases.

All three retailers point to the same underlying issue: housing activity sitting near 40-year lows and consumers pulling back on major projects. Even as Pro-segment engagement and online channels show relative strength, the broader sentiment remains cautious. Affordability constraints and macroeconomic uncertainty continue to act as invisible handcuffs on the sector.

What Happens When You Strip Away the Noise?

Strip out storm-related volatility and demand trends look relatively flat compared to prior quarters. But that’s the catch—when your stock price is tethered to year-over-year comparisons and the prior year included exceptional weather-driven demand, “flat” translates to material headwinds on the surface.

Management has made clear that Home Depot doesn’t engineer its business around storm activity, but the reality is the company has historically benefited enormously from it. When that tailwind disappears, the gap becomes glaringly obvious.

The Valuation Question

From a pure numbers perspective, Home Depot shares have fallen 12.4% over the past year compared to an 18.3% decline for the broader home improvement industry—a slight outperformance that may not hold if Q4 disappoints.

The stock trades at a forward price-to-earnings ratio of 23.83, above the industry average of 21.58. The company carries a Zacks Value Score of F, signaling limited margin of safety at current levels.

Consensus expectations call for fiscal 2025 sales growth of 3.2%, but earnings per share are projected to decline 4.5%—a disconnect that reflects margin pressure and operational headwinds. Home Depot currently holds a Zacks Rank #5 (Strong Sell) rating, indicating professional analysts see limited upside from here.

The Bottom Line

Q4 won’t be pretty on the surface, but that’s partly an optical illusion created by tough storm-driven comparisons. The real question is whether underlying consumer demand can stabilize once weather volatility is removed from the equation. Until housing activity picks up or consumer confidence returns, retail homebuilding stocks face an extended period of below-trend performance.