(Bloomberg) -- Home Depot Inc (NYSE:HD).’s lackluster results last quarter are adding to concerns the U.S. housing market is cooling off.
Revenue and comparable-store sales at the world’s largest home-improvement retailer missed analysts’ estimates, although profit beat expectations for the 16th-straight quarter.
Home Depot’s fortunes are so tightly intertwined with the housing market that they are often viewed as a proxy for the sector. The rationale is simple: If Americans feel like their properties are rising in value, they’ll spend more fixing them up.
But prices have been sagging in some parts of the U.S. and mortgage rates have risen. Labor shortages have also slowed the building of new homes. While that can maintain demand for existing ones, it often limits the number of first-time homebuyers.
Home Depot shares fell as much as 2.4 percent to $186.51 in premarket trading. They had climbed 22 percent in the past year through Monday’s close.
Revenue rose to $24.9 billion in the period that ended April 29, missing the average projection of $25.2 billion.
The company reiterated its annual forecast for revenue of about $107.5 billion and profit of $9.31 a share, confirming a February projection.
Earnings in the first quarter amounted to $2.08 a share, Atlanta-based Home Depot said. Analysts projected $2.05.
Sales at stores open for more than a year -- a key benchmark for investors -- rose 4.2 percent. That missed analysts’ prediction for growth of 5.6 percent, according to Consensus Metrix.
In December, Home Depot laid out long-term goals of boosting annual sales to as much as $120 billion by 2020, from $100.9 billion last year. That would equate to revenue growth of 6 percent a year. It also plans to boost capital expenditures to bolster its supply chain, cut checkout times and train employees.
(Updates with percentage stock decline in fifth paragraph.)