U.S. markets closed
  • S&P 500

    +44.31 (+1.01%)
  • Dow 30

    +238.15 (+0.68%)
  • Nasdaq

    +152.39 (+1.04%)
  • Russell 2000

    +10.17 (+0.46%)
  • Crude Oil

    +0.10 (+0.14%)
  • Gold

    +0.30 (+0.02%)
  • Silver

    +0.01 (+0.03%)

    -0.0003 (-0.02%)
  • 10-Yr Bond

    +0.0210 (+1.66%)

    +0.0002 (+0.01%)

    +0.3260 (+0.30%)

    +398.45 (+1.17%)
  • CMC Crypto 200

    -7.40 (-0.93%)
  • FTSE 100

    +59.28 (+0.85%)
  • Nikkei 225

    +159.80 (+0.58%)

Housing Starts Shunted on Commodity Prices; Big Q1 for Big Box Retail

  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Tuesday, May 18, 2021

This morning, ahead of the open for regular trading, Housing Starts and Building Permits reported their April figures. In them, we see a big drop from expectations, especially on the starts side:

Housing Starts dropped 9.5% month over month to 1.57 million units, well below the 1.70 million anticipated. This is the lowest starts number since the 1.4 million reported for February. The March figure of 1.74 million, on the other hand, was the best since 2006.

Building Permits — a proxy for future starts — came just about in-line: 1.76 million versus 1.77 million. The previous month’s revision came down to 1.76 million from 1.77 million originally reported. For a bit of perspective, this is down from the high watermark pandemic-era figure in January: 1.89 million units — also the best since 2006.

What’s stopping progress in the homebuilding industry are supply chain issues and very high commodity prices. Even workforce issues exist: homebuilders are not finding enough workers to build new houses at their expected rate. We all know about the record lumber prices; we’re now seeing builders delaying starts because of them.

The biggest problem beneath the headline comes from single-family homes, which are down 13.4% to 1.087 million. As single-family housing is a much better-performing source of homebuilding compared to multi-family (which is not performing as badly), this is where we see a main crimp in industry strength.

Much was expected from this group, as well; a year ago, homebuilding overall had ground to an absolute halt. Question is: when will these issues begin to dissipate?

Walmart WMT shares are +3.4% in the pre-market after a big beat on its January Q1 bottom line: $1.69 per share versus $1.22 expected, and a nice surge from the $1.18 per share reported a year ago. Revenues of $131.34 billion beat the Zacks consensus by almost 3%. The company has only missed earnings estimates three times in the past five years, and today’s beat surpasses the trailing 4-quarter average beat of 10%.

Home Depot HD also reported fiscal Q1 numbers well ahead of expectations: $3.86 per share versus $3.04 estimated, far beyond the $2.08 per share in the year-ago quarter. Sales grew 32.7% to $37.5 billion in the quarter, easily bettering the $34.88 billion. Impressively, Home Depot had increased inventories 28% in the quarter, and it still wasn’t enough to keep up with sales. Halcyon days for the home improvement giant, indeed.

Macy’s M swung to positive earnings versus the Zacks consensus this morning — +39 cents per share versus a loss of 41 cents expected — on revenues of $4.71 billion, which grew 62.5% year over year. The long-suffering department store has also upped its full-year 2021 guidance: to $1.71-2.02 on the bottom line versus the anticipated 77 cents per share, on between $21.73-22.23 billion in revenues, taking out the earlier estimate of $20.982 billion.

Questions or comments about this article and/or its author? Click here>>

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
Macys, Inc. (M) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report