Please try a new searchHome Depot faces uncertain earnings outlookBut it has strong cash flow and a consistent dividend yield.Stock price weakness offers a buying opportunity as fundamentals remain strongFor tools, data and content to help you make better investment decisions, try InvestingPro+The recent drop in Home Depot (NYSE:HD ) shares leaves no doubt that the era of easy growth is over for the home improvement giant.Its shares have fallen more than 34% so far this year, outperforming the already bearish S&P 500 in the same period.The pullback comes after the company's remarkable results, fueled by a booming housing market and low interest rates, two catalysts that have enticed Americans to spend more on their homes.During that period, demand from professional contractors and DIY customers was so strong that the Atlanta, Georgia-based home improvement retailer posted double-digit sales growth.However, amid 4-decade inflation and rising interest rates, those favorable conditions appear to have reversed, clouding the company's earnings outlook.According to CFO Richard McPhail in a recent call with analysts:"There remains broader uncertainty about the impact of inflation, supply chain dynamics and the evolution of consumer spending throughout the year."Home Depot now forecasts like-for-like sales growth of 3% this year, up from 14.4% a year earlier.The biggest threat to home-linked securities is if the US Federal Reserve will keep raising interest rates to fight inflation.If that happens, it will hurt demand for single-family homes, one of the main drivers of home improvement demand during the pandemic.According to Mark Zandi, chief economist at Moody's Analytics:"[Rates in the US] have quickly gone from being a huge tailwind for the housing market to a huge headwind."He expects house prices to flatten over the next 18 to 24 months, with possible declines in the high-flying South and West.Despite growing headwinds, the home décor giant remains one of the top defensive stocks to buy, especially after such a significant price correction.Strong revenues over the past two years have contributed to impressive cash flow generation.Also, consumer staples are a defensive game during recessions as they pay steady dividends.Over the past five years, Home Depot's quarterly dividend has grown, on average, 22% a year, to $1.9 a quarter, for an annual dividend yield of about 2.8%.There is much more room to grow due to the company's strong payout ratio of 50%.Improved resilienceHome Depot has also restructured its business, becoming more resilient in weathering housing market downturns by expanding its focus on professional contractors, who now account for about 45% of company revenue.Also, as part of its cost-cutting drive, the company has stopped opening new stores and has about 2,300, the same number it had a decade ago.Analysts continue to rate HD shares as buy, and its 12-month consensus price target implies 28.4% upside potential from current levels, according to an Investing.com survey.In a recent note to clients, Wells Fargo (NYSE:WFC) named Home Depot one of the best stocks in its class, after its recent survey showed the home improvement category is holding up well despite of the challenging macro environment.Explaining:"Putting it all together, it appears that homeowners are becoming somewhat more cautious. However, given the scant anecdotal evidence of a slowdown coming from the two largest home improvement players (probably reflecting some level of share gains ), we are inclined to believe that home improvement spending should remain relatively healthy."Morgan Stanley also called HD "overweight," saying its survey checks show home improvement is "healthy and moderating."HD's stock may look risky as concerns loom over the future of the US housing market.But the current decline in stocks offers long-term investors the opportunity to buy a quality stock that pays an attractive dividend and is well positioned to perform during an economic downturn.Today's market makes it harder than ever to make the right decisions.Think about the challenges:Interest Rate HikesTo tackle them, you need good data, powerful tools to classify the data, and insight into what it all means.Take the emotion out of investing and focus on the fundamentals.Barron's magazine published a few days ago an article about Managed Futures, which are the only strategies that are winning this year: Precisely in Carta Financiera...The deteriorating economic outlook is weighing on social media stocks, with falling Meta Revenue growth...The S&P Merval subtracted 2.9%, to the area of ​​83,170 points, a minimum since May 9.The bonds operated in negative and the country risk reached 2,278 points, the highest since August...From Investing.com Spain we invite you to interact with other users and share with them your points of view and your doubts in relation to the market.However, in order for the debate to be as enriching as possible, please, we ask you to take into account the following criteria:How does the comments section work?All comments are published automatically as long as they do not violate any of the above rules.As soon as the system detects a possible "infraction", the comment is pending review, so it may take longer to appear on the screen (avoid duplicating comments).If the moderator detects that it is an inappropriate comment, he will proceed to eliminate it.If the user engages in such behavior, we will proceed to temporarily suspend your account and it will count as a first notice.If the behavior is repeated after the first notice, the account will be permanently suspended.Contact Technical Support with any questions that may arise.It is the only way of communication to deal with these issues.Are you sure you want to block %USER_NAME%?By doing so, neither you nor %USER_NAME% will be able to see each other's posts on Investing.com.%USER_NAME% has been successfully added to your blocked users listYou just unblocked this person;you have to wait 48 hours to be able to block it again.Tell us what you think of this comment