Home Depot Beats Expectations, Driven by Strong Q3 Results and Hurricane-Driven Demand

LOCAL MARKET COMMENTARY

The Top 40 index fell by 0.66% to 76,130 points yesterday, while the All Share index closed at 84,201 points, down 0.67%. The unemployment rate showed a slight improvement, decreasing from 33.5% in Q2 to 32.1%. Manufacturing output saw a modest year-on-year decline of 0.8% in September. MultiChoice Group reported a sharp 99% drop in half-year profits, impacted by a challenging business environment and declining subscriptions. Meanwhile, Premier Group posted a strong 32.4% increase in interim profit and announced R1.1 billion in funds available for future acquisitions.

EUROPEAN MARKET COMMENTARY

European markets declined on Tuesday as investors assessed new economic data. In Germany, official figures confirmed that inflation rose to 2.4% in October, up from 1.8% in September, aligning with previous estimates. In the UK, wage growth (excluding bonuses) dropped to its lowest level in over two years during the third quarter, which may strengthen the Bank of England's view that inflationary pressures are likely to ease. The Office for National Statistics reported that average weekly earnings, excluding bonuses, were 4.8% higher for the three months ending in September compared to the previous year, a slight dip from 4.9% in the prior month and down significantly from nearly 8% a year ago.

US MARKET COMMENTARY

Wall Street's major indices fell on Tuesday as investors took profits from a recent post-election rally and awaited key U.S. inflation data expected this week. Markets had surged to record highs following the Nov. 5 election, driven by optimism over President-elect Donald Trump's proposed tax cuts and potential deregulation. However, concerns emerged about whether these policies might increase inflation. Investors are closely watching upcoming consumer price inflation data, as well as producer prices and retail sales figures, for hints on the Federal Reserve's future policy decisions.

ASIA MARKET COMMENTARY

Asia-Pacific stock markets declined this morning as traders analysed Japan's latest corporate goods data. The report revealed that year-on-year producer price growth, a measure of wholesale inflation, rose to 3.4% in October, the highest level since July of the previous year. This figure exceeded economists' expectations of 3% and was also higher than the 2.8% increase recorded in September.

CURRENCY MARKET COMMENTARY

South Africa's rand fell to a three-month low on Tuesday, pressured by a stronger U.S. dollar and declining gold prices. Market uncertainty around the potential implications of another Donald Trump presidency on U.S. policy and trade relations added to the currency's weakness. The U.S. dollar remained near a 6.5-month high against major currencies, while Bitcoin held strong just below its record highs as investors awaited key U.S. inflation data expected later in the day.

COMMODITY MARKET COMMENTARY

Gold prices rose slightly this morning as investors sought bargains following significant losses in the previous session. The focus is now on upcoming U.S. inflation data, which could influence the Federal Reserve's future monetary policy decisions. Meanwhile, oil prices also edged up amid indications of short-term supply tightness, but they stayed near a two-week low after OPEC revised down its global oil demand growth forecasts for 2024 and 2025.

Premier Group Limited (PMR) -0.59%

The company experienced encouraging financial growth this period, with revenue increasing by 3.7% to R9.7 billion. EBITDA rose by a healthy 13.5% to R1.2 billion, and operating profit grew by 17.3%, reaching R945 million. Both earnings per share (EPS) and headline earnings per share (HEPS) showed substantial improvements, each rising by over 30% to 438 cents per share. These results reflect the company's focus on operational efficiency and consistent performance, marking a positive trajectory as it continues to strengthen its financial position.

Multichoice Group Limited (MCG) +0.27%

For the period ending 30 September 2024, the company faced challenges across several key financial indicators. Revenue declined by 10% to ZAR 25.4 billion, with operating profit decreasing by 49% to ZAR 2.45 billion. Trading profit also saw a reduction of 46%, and free cash flow was down 48%. Core headline earnings per share fell significantly, down 98% to 7 cents, while adjusted core headline earnings dropped by 99% to just 2 cents. The loss per share expanded by 36%, and headline loss per share increased by 47%. Net asset value per share turned negative at -634 cents, a shift from 181 cents in the prior year, highlighting a challenging period for the company amidst broader market pressures.

PowerFleet INC (PWR) -6.40%

In the second quarter of 2025, the company achieved solid financial growth, with total revenue rising by 7% year-over-year to $77.0 million, fuelled by strong demand for Unity safety solutions. Product revenue increased by 13% to $20.3 million, benefiting from improved gross margins, while service revenue grew by 5% to $56.7 million. The recent integration of MiX contributed to cost synergies of $13.5 million, lowering operating expenses by more than 5%. Adjusted EBITDA saw a robust increase of 41%, reaching $14.5 million, supported by higher gross profits and effective cost management. Over the first half of 2025, revenue totalled $152.4 million, marking a 9% growth, with adjusted EBITDA up 46% to $28.2 million, reflecting the company’s continued focus on operational efficiencies and revenue expansion.

Rocket Lab USA Inc. (RKLB) -0.81%

Rocket Lab shares soared in after-hours trading following the release of strong third-quarter results and the announcement of its first customer for the upcoming Neutron vehicle. Revenue increased by 55% year-over-year to $104.8 million, surpassing Wall Street's forecast of $102 million. While the company reported a higher net loss of $51.9 million, the loss per share came in at 10 cents, slightly better than the expected 11 cents. For the fourth quarter, Rocket Lab projects revenue between $125 million and $135 million, targeting approximately $430 million for the full year. Most of the revenue growth stemmed from the Space Systems unit, which brought in $83.9 million, while the Launch unit contributed $21 million, comparable to last year's performance.

Home Depot Inc. (HD) -1.28%

Home Depot revised its annual same-store sales forecast to a smaller decline, supported by steady demand from professional contractors and a boost in hurricane-related spending last quarter. The company reported stronger-than-expected third-quarter results, marking an improvement from prior challenges with cautious consumer spending. Hurricane-related sales contributed $200 million, pushing comparable sales positive in October. Home Depot’s focus on professional customers, highlighted by its $18.25 billion acquisition of SRS, has solidified its market position. Comparable sales fell by 1.3%, outperforming the expected 3.25% decline, and earnings were $3.67 per share, slightly above estimates. The company now anticipates a 2.5% drop in comparable sales for fiscal year 2024, an improvement from the previous forecast of a 3%-4% decline.

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