Home Depot Quarterly Profit Beats, Outlook Positive

by Ike Obudulu Posted on May 21st, 2019

Home improvement retailer, Home Depot Inc. (HD), reported that its first-quarter earnings per share increased 9.1 percent year-on-year. Comparable sales were up 2.5 percent, and comparable sales in the U.S. rose 3.0 percent. As a result of the strategic investments, and the current macroeconomic and housing backdrop, Home Depot reaffirmed its sales and earnings guidance for fiscal 2019.

For the first-quarter, net earnings were $2.5 billion, or $2.27 per share, compared to $2.4 billion, or $2.08 per share, prior year. On average, 29 analysts polled by Thomson Reuters expected the company to report profit per share of $2.19 for the quarter. Analysts’ estimates typically exclude special items.

First-quarter net sales were up 5.7% to $26.38 billion from $24.95 billion, a year ago. Analysts expected revenue of $26.39 billion for the quarter.

Sector analysts have said that unusually cold and wet weather in several U.S. states, which delayed the onset of spring and kept many Americans indoors, were likely to have hurt first-quarter sales of Home Depot’s gardening-related products.

While the unfavorable weather has led contractors to delay housing projects and prevented do-it-yourself customers from working outdoors, land and labor shortages have also hurt lumber demand.

In its first quarter results release, the company said only that bad weather in February had depressed results. It was due to hold a call with analysts later on Tuesday.

“We were pleased with the underlying performance of the core business despite unfavorable weather in February and significant deflation in lumber prices compared to a year ago,” Chief Executive Officer Craig Menear said in the results statement.

Lumber futures have fallen 28.6% since their 2019 highs in early February. The commodity made up nearly 8% of Home Depot’s sales in the last fiscal year.

Same-store sales at the home improvement chain rose 2.5% in the quarter ended May 5 and missed expectations of a 4.2% increase, according to IBES data from Refinitiv.

The company’s net income rose to $2.51 billion, or $2.27 per share, from $2.4 billion, or $2.08 per share, a year earlier.

For fiscal 2019, a 52-week year, the company continues to project sales to grow by approximately 3.3 percent compared to 53-week fiscal 2018, and comp sales for the comparable 52-week period to be up approximately 5.0 percent. The company expects earnings per share growth of approximately 3.1 percent for the fiscal year.

The Home Depot, Inc. earnings at a glance:

-Earnings (Q1): $2.51 Bln. vs. $2.40 Bln. last year.
-EPS (Q1): $2.27 vs. $2.08 last year.
-Analysts Estimate: $2.19
-Revenue (Q1): $26.38 Bln vs. $24.95 Bln last year.

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