Home Depot (NYSE:HD) shares are somewhat volatile but largely unchanged this morning after the company reported better-than-expected second-quarter financial results but cut its full-year revenue and earnings forecast. The retailer noted that its performance was negatively impacted by “higher interest rates and greater macroeconomic uncertainty.”

Home Depot’s second quarter results and forecast cuts

The company’s revenue rose 0.7% to $43.2 billion in the last quarter compared to the same period last year. The latter figure was well above analysts’ average estimate of $3.83 billion. The company’s earnings per share came in at $4.67, little changed from the second quarter of 2023. Analysts on average had expected earnings per share of $4.55.

However, Home Depot’s comparable store sales fell 3.3 percent year-over-year.

In terms of guidance, the company now expects its comparable sales to decline 3 to 4 percent this year, down from a 1 percent decline previously. In addition, it expects earnings per share to decline 1 to 3 percent for the full year, down from a 1 percent increase previously.

Cautious comments from Home Depot

Home Depot CEO Edward Decker reported that in the second quarter, “higher interest rates and greater macroeconomic uncertainty put pressure on consumer demand generally, leading to lower spending on home improvement projects.” In addition, the recent increase in the U.S. unemployment rate could also negatively impact the company’s outlook.

HD shares: reasons for optimism

On a positive note, interest rates have fallen in recent weeks. The interest rate on 10-year US bonds has fallen from 4.67% on April 26 to 3.86% currently.

In addition, investment bank DA Davidson upgraded its rating on HD stock from “neutral” to “buy” on June 26. The bank expects the company to benefit from the decline in interest rates, a trend that could continue later this year or in 2025, boosting the retailer’s shares in the process.

Shares have been little changed so far this year, but have fallen 6% in the past month.

At the time of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.