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Bloomberg

Home Depot Inc. fell as much as 1.7 percent after failing to raise its forecasts for sales and profit this year amid signs the housing market is cooling.

Revenue in the fiscal year through January will increase 4.8 percent, Atlanta-based Home Depot reiterated today in a statement. The projection translates to revenue of about $82.59 billion. The average of analysts’ estimates compiled by Bloomberg was $82.64 billion.

Chief Executive Officer Craig Menear, who succeeded Frank Blake this month, takes over the largest U.S. home-improvement retailer amid slowing gains in U.S. home prices and sales. The company had benefited from the housing market’s post-recession rebound, which fueled more than four years of sales gains and pushed the shares to a record last week.

“They tend to guide somewhat conservatively,” Scot Ciccarelli, an analyst at RBC Capital Markets in New York, said in a telephone interview. He has the equivalent of a buy rating on Home Depot and said today’s share decline may be due to investors locking in profits after the stock’s recent gains.

Home Depot also reiterated that it expects profit in the current fiscal year to increase 21 percent to about $4.54 a share. That figure includes an estimated $34 million in costs related to the data breach it disclosed in September as well as the benefit of the company’s $7 billion in year-to-date and planned share buybacks. Analysts estimated net earnings per share of $4.53, on average.

Home Depot, which climbed as high as $99.36 last week, slid 0.7 percent to $97.30 at 9:42 a.m. in New York and earlier dropped as low as $96.40. The shares had gained 19 percent this year through yesterday. Lowe’s Cos. advanced about 19 percent in that time as well, while the Standard & Poor’s 500 Index increased 10 percent.

Profit Rises

Net income in the three months through Nov. 2 rose 14 percent to $1.54 billion, or $1.15 a share, Home Depot said today. The average of 26 analysts’ estimates compiled by Bloomberg was $1.13. Sales rose 5.4 percent to $20.5 billion, also topping projections.

If a gain from the sale of Home Depot’s stake in HD Supply Holdings Inc. and costs related to a data breach disclosed during the quarter were excluded, profit would have been $1.12 a share. The performance may have disappointed investors, said Rob Plaza, an analyst at Key Private Bank in Cleveland. The firm owns Home Depot shares.

“Given that earnings were essentially in line and the guidance was flat, it makes sense for the stock to sell off a little bit,” Plaza said in an interview.

Store Sales

Home Depot’s same-store sales, considered an important measure of performance because only established locations are counted, rose 5.2 percent in the quarter. Analysts projected a gain of 5 percent, according to Consensus Metrix.

The retailer had about 355.4 million transactions during the quarter, 3.2 percent more than a year earlier. The average sale rose 2.3 percent to $57.55.

The retailer said earlier this year that hackers stole 53 million e-mail addresses and gained access to the details of 56 million payment cards. The company has said it didn’t expect the attack to damp sales and today repeated its forecast that revenue would rise 4.8 percent this year.

Both Home Depot and Lowe’s, which reports third-quarter results tomorrow, have been benefiting from rising home prices, which have prompted consumers to spend more on their homes.

The median price for a single-family home in the U.S. rose 4.9 percent from a year earlier in the three months through September, according to a report from the National Association of Realtors. That came after gains of 4.4 percent in the second quarter and 8.3 percent in the first quarter. Price appreciation, however, is moderating as more properties are listed for sale and buyer demand slows, the group said.

Home Sales

The number of contracts to buy existing homes also rose less than forecast in September, signaling demand may plateau heading into the end of 2014. The pending home sales index increased 0.3 percent after dropping 1 percent in August, the group said last month. The median projection in a Bloomberg survey of economists called for a 1 percent gain.

Existing-home sales also are an important indicator for Home Depot because buyers often spend to update fixtures and appliances.