Home Depot Q4 Profit, Revenues Miss; Outlook Negative

by Ike Obudulu Last updated on May 21st, 2019,

Home improvement retailer Home Depot, Inc. (HD) on Tuesday reported a nearly 32 percent increase in profit for the fourth quarter from last year as higher sales helped offset the negative impact of an impairment loss.

However, results for the quarter missed analysts’ expectations and the company also forecast fiscal 2019 earnings below their estimates. The company’s shares are losing more than 3 percent in pre-market activity.

In addition, the company’s board declared a 32 percent increase in the quarterly dividend and authorized a new $15 billion share repurchase program.

The company’s net earnings for the fourth quarter were $2.34 billion or $2.09 per share, up from $1.78 billion or $1.52 per share in the same period last year.

The latest quarter’s results were negatively impacted by a nonrecurring, pre-tax charge of about $247 million, or $184 million after tax, equalling $0.16 per share, due to an impairment loss related to certain trade names at Interline Brands.

On average, 28 analysts polled by Thomson Reuters expected the company to report earnings per share of $2.16 for the quarter. Analysts’ estimates typically exclude special items.

Net sales for the quarter rose 10.9 percent to $26.49 billion from $23.88 billion a year ago. Analysts had a consensus revenue estimate of $26.57 billion for the quarter.

Comparable sales for the quarter were positive 3.2 percent, and comparable sales in the U.S. were positive 3.7 percent.

Looking ahead to fiscal 2019, Home Depot forecast earnings-per-share growth of approximately 3.1 percent to $10.03, sales growth of about 3.3 percent, and comparable sales growth of about 5.0 percent.

The Street expects the company to report earnings of $10.26 per share for the year on revenues of $112.02 billion.

Home Depot reiterated its fiscal 2020 outlook for sales ranging from approximately $115 billion to approximately $120 billion and operating margin ranging from approximately 14.4 percent to approximately 15.0 percent.

The company’s board of directors declared a 32.0 percent increase in its quarterly dividend to $1.36 per share. The dividend is payable on March 28, 2019, to shareholders of record on the close of business on March 14, 2019.

The board authorized a new $15 billion share repurchase program, replacing its previous authorization.

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