Weather's Influence on Quarterly Earnings & Stock Prices
Captain's Log
Weather's Influence on Quarterly Earnings...it's more than just an excuse
By CEO Captain Bill Kirk
Weather and climate-sensitive industries, both directly and indirectly, account for about one-third of GDP," said the National Oceanic and Atmospheric Administration (NOAA) in front of the U.S. Congress some 20 years ago. By today's standards, that's $9.5 trillion impacted by the ever-volatile weather. While there have been 396 major weather disasters since 1980 costing the U.S. $2.8 trillion, it's the subtle changes in everyday weather that are impacting equity performance of big retailers and seasonal merchandise suppliers.
2024 was indeed a severe weather year with the worst Spring floods in 31 years, most tornadoes in 13 years, 2nd worst hurricane damage in 174 years, 216% more wildfire acres burned than prior years, (the most in 4 years) and then followed by the hottest/driest Fall in U.S. history. But it's not just extreme weather impacting equity performance.
Home Depot (NYSE: HD) earnings and stock trends show clear signs of the weather's influence on overall performance. Home Depot Chief Financial Officer Richard McPhail said "Weather pressured sales, too, in the recent quarter. Spring is the biggest sales season for home improvement retailers, including Home Depot. Yet customers delayed outdoor purchases because of colder and wetter weather in many parts of the country." FIGURE 1 shows U.S. rainfall and temperature trends validating the weather was indeed the wettest in 26 years, but the warmest in 12 years. Clearly, this hurt demand for outdoor Spring seasonal goods, like building materials and lawn and garden.
FIGURE 1: U.S. rainfall and temperature trends through April 2024 across all Home Depot stores. CLICK ON IMAGE FOR A LARGER VIEW
What did Wall Street expect for Q1 (Feb-Apr)? Factoring in all the known macro-economic factors, like higher interest rates (6.4% in Q1 2023 vs 6.7% in Q1 2024), the Street expected HD to report -2% Same-store-sales (SSS) for Q1. What they didn't know was just how wet it was and how that would ultimately bring a surprise to HD earnings. They reported -2.8% SSS, lower than expected, due in large part to the one thing that changed - the wettest early Spring in 26 years. As a result, the stock price fell from a Spring high of $395 to a May low of $308 (-22%).
FIGURE 2: Home Depot (NYSE: HD) 2024 Stock Price and major weather events. (CLICK ON IMAGE FOR A LARGER VIEW)
The next big uptick in sales came with the hottest June in 129 years across the U.S. driving triple digit sales gains for everything under the sun, including higher-margin, big ticket items like Air Conditioners. This helped bring a +15% bounce in HD stock price.
Then everyone waited for the big hurricane season to start which went unusually quiet in August. And we all know what happened in September and October with four landfalling hurricanes devastating Florida and the Southeast U.S. weathertrends360 Power of 1 Degree® technology has quantified how seasonal sales go up and down with every degree of temperature and every inch of rainfall and the benefit, or detriment, of landfalling hurricanes on 100 equities. Home Depot historically benefits from warm/dry weather year-round supporting consumer outdoor project purchases, but also about a 50-basis point surge with every landfalling hurricane.
What did Wall Street expect for Q3 (Aug-Oct)? The consensus was that HD would report -3.2% SSS. What they didn't know was just how dry it would be during Fall benefiting HD seasonal sales but also the impact of four landfalling hurricanes on building materials and storm-related merchandise. 50 basis points x 4 hurricanes should have meant a 2% upside surprise. Home Depot reported Q3 earnings on November 12th with much higher-than-expected earnings and SSS down just -1.3%, beating the Streets expectations by nearly 200 basis points.
Weather Trends Equity 100 Report & Data, with historical and year-ahead outlooks, helps to eliminate some of these hit-or-miss earnings surprises as they relate to weather's influence on a hundred weather-sensitive businesses. END
Weather Trends International Background Information
For over 20 years, Weather Trends International ("weathertrends360") has developed and perfected revolutionary YEAR-AHEAD predictive weather analytics (Agentic AI forecasting technology) that produces the most accurate YEAR-AHEAD long-range weather forecasts for every mile on Earth (32 million grid points). 100% automated forecasts that DO NOT CHANGE once issued making it so valuable for billion-dollar decisions across any industry. We set out to prove that over the past 20+ years, IT WORKS!
But just as important, the YEAR-AHEAD technology (DaaS, SaaS and 1000s of Syndicated Business Intelligence Reports) predicts outcomes for retail sales, seasonal category sales, equity performance, weather-sensitive disease risk, agricultural/commodity trends, YOUR LIFE, and it does it in 30 seconds. The wt360 Agentic AI systems actively monitor weather conditions across every mile on Earth in real time to PROACTIVELY produce actionable YEAR-AHEAD weather trends and seasonal sales trends by week, by mile, by store across millions of retail geographies. No hallucinating with our intelligence. See DOMO video
We've spent our lives proving that YEAR-AHEAD weather and business outcomes bring significant ROIs scalable across any industry anywhere in the World. WT360 has over 100 Fortune 1,000 clients in 12 verticals: retail, e-commerce, advertising, financial services, commodity trading (video), insurance, seasonal manufacturers, food and beverage, pharma, Ag, energy, and consumer proving we can outsmart AI!
Together we can revolutionize YEAR-AHEAD predictive outcomes for ANYTHING, ANYTIME, EVERYWHERE.
Let's Talk! - Captain Kirk out
By CEO Captain Bill Kirk
Weather and climate-sensitive industries, both directly and indirectly, account for about one-third of GDP," said the National Oceanic and Atmospheric Administration (NOAA) in front of the U.S. Congress some 20 years ago. By today's standards, that's $9.5 trillion impacted by the ever-volatile weather. While there have been 396 major weather disasters since 1980 costing the U.S. $2.8 trillion, it's the subtle changes in everyday weather that are impacting equity performance of big retailers and seasonal merchandise suppliers.
2024 was indeed a severe weather year with the worst Spring floods in 31 years, most tornadoes in 13 years, 2nd worst hurricane damage in 174 years, 216% more wildfire acres burned than prior years, (the most in 4 years) and then followed by the hottest/driest Fall in U.S. history. But it's not just extreme weather impacting equity performance.
Home Depot (NYSE: HD) earnings and stock trends show clear signs of the weather's influence on overall performance. Home Depot Chief Financial Officer Richard McPhail said "Weather pressured sales, too, in the recent quarter. Spring is the biggest sales season for home improvement retailers, including Home Depot. Yet customers delayed outdoor purchases because of colder and wetter weather in many parts of the country." FIGURE 1 shows U.S. rainfall and temperature trends validating the weather was indeed the wettest in 26 years, but the warmest in 12 years. Clearly, this hurt demand for outdoor Spring seasonal goods, like building materials and lawn and garden.
FIGURE 1: U.S. rainfall and temperature trends through April 2024 across all Home Depot stores. CLICK ON IMAGE FOR A LARGER VIEW
What did Wall Street expect for Q1 (Feb-Apr)? Factoring in all the known macro-economic factors, like higher interest rates (6.4% in Q1 2023 vs 6.7% in Q1 2024), the Street expected HD to report -2% Same-store-sales (SSS) for Q1. What they didn't know was just how wet it was and how that would ultimately bring a surprise to HD earnings. They reported -2.8% SSS, lower than expected, due in large part to the one thing that changed - the wettest early Spring in 26 years. As a result, the stock price fell from a Spring high of $395 to a May low of $308 (-22%).
FIGURE 2: Home Depot (NYSE: HD) 2024 Stock Price and major weather events. (CLICK ON IMAGE FOR A LARGER VIEW)The next big uptick in sales came with the hottest June in 129 years across the U.S. driving triple digit sales gains for everything under the sun, including higher-margin, big ticket items like Air Conditioners. This helped bring a +15% bounce in HD stock price.
Then everyone waited for the big hurricane season to start which went unusually quiet in August. And we all know what happened in September and October with four landfalling hurricanes devastating Florida and the Southeast U.S. weathertrends360 Power of 1 Degree® technology has quantified how seasonal sales go up and down with every degree of temperature and every inch of rainfall and the benefit, or detriment, of landfalling hurricanes on 100 equities. Home Depot historically benefits from warm/dry weather year-round supporting consumer outdoor project purchases, but also about a 50-basis point surge with every landfalling hurricane.
What did Wall Street expect for Q3 (Aug-Oct)? The consensus was that HD would report -3.2% SSS. What they didn't know was just how dry it would be during Fall benefiting HD seasonal sales but also the impact of four landfalling hurricanes on building materials and storm-related merchandise. 50 basis points x 4 hurricanes should have meant a 2% upside surprise. Home Depot reported Q3 earnings on November 12th with much higher-than-expected earnings and SSS down just -1.3%, beating the Streets expectations by nearly 200 basis points.
Weather Trends Equity 100 Report & Data, with historical and year-ahead outlooks, helps to eliminate some of these hit-or-miss earnings surprises as they relate to weather's influence on a hundred weather-sensitive businesses. END
Weather Trends International Background Information
For over 20 years, Weather Trends International ("weathertrends360") has developed and perfected revolutionary YEAR-AHEAD predictive weather analytics (Agentic AI forecasting technology) that produces the most accurate YEAR-AHEAD long-range weather forecasts for every mile on Earth (32 million grid points). 100% automated forecasts that DO NOT CHANGE once issued making it so valuable for billion-dollar decisions across any industry. We set out to prove that over the past 20+ years, IT WORKS!
But just as important, the YEAR-AHEAD technology (DaaS, SaaS and 1000s of Syndicated Business Intelligence Reports) predicts outcomes for retail sales, seasonal category sales, equity performance, weather-sensitive disease risk, agricultural/commodity trends, YOUR LIFE, and it does it in 30 seconds. The wt360 Agentic AI systems actively monitor weather conditions across every mile on Earth in real time to PROACTIVELY produce actionable YEAR-AHEAD weather trends and seasonal sales trends by week, by mile, by store across millions of retail geographies. No hallucinating with our intelligence. See DOMO video
We've spent our lives proving that YEAR-AHEAD weather and business outcomes bring significant ROIs scalable across any industry anywhere in the World. WT360 has over 100 Fortune 1,000 clients in 12 verticals: retail, e-commerce, advertising, financial services, commodity trading (video), insurance, seasonal manufacturers, food and beverage, pharma, Ag, energy, and consumer proving we can outsmart AI!
Together we can revolutionize YEAR-AHEAD predictive outcomes for ANYTHING, ANYTIME, EVERYWHERE.
Let's Talk! - Captain Kirk out