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Will Home Depot (HD) Continue Its Earnings Beat Trend in Q4?
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The Home Depot, Inc. (HD - Free Report) is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2022 results on Feb 21, before market open. The Zacks Consensus Estimate for its fiscal fourth-quarter earnings of $3.26 per share suggests growth of 1.6% from the year-ago period’s reported figure. The consensus estimate has moved down by a penny in the past seven days.
The consensus mark for quarterly revenues is pegged at $35.97 billion, indicating growth of 0.7% from the figure reported in the year-ago quarter.
For fiscal 2022 earnings, the consensus mark for earnings is pegged at $16.63, suggesting growth of 7.1% from the year-ago quarter’s reported figure. The consensus mark has moved down by a penny in the past seven days. The Zacks Consensus Estimate for the company’s fiscal 2022 revenues is pegged at $157.54 billion, suggesting 4.2% growth from the prior-year quarter’s reported figure.
We expect the company’s fiscal fourth-quarter total revenues to increase 0.1% year over year to $35,761.2 million and the bottom line to decline 0.6% to $3.19 per share. For fiscal 2022, we estimate revenue growth of 4.1% to $157,333.2 million and earnings per share growth of 6.7% to $16.57.
In the last reported quarter, the company delivered an earnings surprise of 3.2%. The leading home improvement retailer delivered an earnings surprise of 4.2% in the last four quarters, on average.
Home Depot’s fourth-quarter fiscal 2022 performance is likely to have benefited from the continued strong demand for home improvement projects, a robust housing market and ongoing investments. The company has been witnessing a rise in average ticket, driven by high-value purchases by home builders. This has been aiding comparable store sales.
On the last reported quarter’s earnings call, the company anticipated comps growth of 3% for fiscal 2022. For the fiscal fourth quarter, our model estimates 8.3% growth in average ticket, offset by a 7.9% decline in the number of customer transactions. Our model estimates comps growth of 0.2% for the fourth quarter and 3.2% for fiscal 2022.
HD is expected to have witnessed growth in the Pro and DIY customer categories, along with digital momentum, in the fiscal fourth quarter.
Home Depot has been witnessing significant benefits from the execution of its "One Home Depot" plan focused on expanding the supply chain, technology investments and digital enhancements. The company’s interconnected retail strategy and underlying technology infrastructure have been consistently boosting web traffic for the past few quarters. This is expected to have aided digital sales in the to-be-reported quarter.
However, Home Depot is likely to have witnessed continued cost pressures in fourth-quarter fiscal 2022, driven by the impacts of inflation, supply-chain dynamics and the consumer spending environment. Higher transportation costs and product mix are expected to have resulted in higher cost of goods sold in the fiscal fourth quarter, leading to a lower gross margin.
Further, the investments in its supply chain are expected to have marred the gross margin in the to-be-reported quarter. Higher inventory levels and interest expenses are expected to have been concerning.
On its last reported quarter’s earnings call, management expected the uncertainties relating to the supply-chain issues, inflation and the overall consumer environment to persist throughout fiscal 2022.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Home Depot has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.46%.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +1.96% and a Zacks Rank of 1. The company is likely to register top and bottom-line declines when it reports fourth-quarter fiscal 2022 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.5 billion, which suggests a decline of 2.5% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for American Eagle’s earnings has moved up 11.1% to 30 cents per share in the past 30 days. The consensus estimate indicates a 14.3% decline from the year-ago quarter’s reported figure.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +1.37% and a Zacks Rank of 2. The company is likely to register growth in the bottom line when it reports fourth-quarter fiscal 2022 numbers. The consensus mark for BURL’s quarterly earnings has been unchanged in the past 30 days at $2.71 per share. The consensus estimate suggests 7.1% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Burlington Stores’ quarterly revenues is pegged at $2.6 billion, which suggests a decline of 0.4% from the figure reported in the prior-year quarter.
Builders FirstSource (BLDR - Free Report) currently has an Earnings ESP of +26.09% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter 2022 results. The consensus mark for BLDR’s quarterly revenues is pegged at $4.2 billion, which suggests an 8.7% decline from the figure reported in the prior-year quarter.
The consensus mark for BLDR’s quarterly earnings has moved up 4.4% in the past 30 days to $2.37 per share. The consensus estimate suggests a decline of 14.8% from the year-ago quarter.
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Will Home Depot (HD) Continue Its Earnings Beat Trend in Q4?
The Home Depot, Inc. (HD - Free Report) is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2022 results on Feb 21, before market open. The Zacks Consensus Estimate for its fiscal fourth-quarter earnings of $3.26 per share suggests growth of 1.6% from the year-ago period’s reported figure. The consensus estimate has moved down by a penny in the past seven days.
The consensus mark for quarterly revenues is pegged at $35.97 billion, indicating growth of 0.7% from the figure reported in the year-ago quarter.
For fiscal 2022 earnings, the consensus mark for earnings is pegged at $16.63, suggesting growth of 7.1% from the year-ago quarter’s reported figure. The consensus mark has moved down by a penny in the past seven days. The Zacks Consensus Estimate for the company’s fiscal 2022 revenues is pegged at $157.54 billion, suggesting 4.2% growth from the prior-year quarter’s reported figure.
We expect the company’s fiscal fourth-quarter total revenues to increase 0.1% year over year to $35,761.2 million and the bottom line to decline 0.6% to $3.19 per share. For fiscal 2022, we estimate revenue growth of 4.1% to $157,333.2 million and earnings per share growth of 6.7% to $16.57.
In the last reported quarter, the company delivered an earnings surprise of 3.2%. The leading home improvement retailer delivered an earnings surprise of 4.2% in the last four quarters, on average.
The Home Depot, Inc. Price and EPS Surprise
The Home Depot, Inc. price-eps-surprise | The Home Depot, Inc. Quote
Key Factors to Note
Home Depot’s fourth-quarter fiscal 2022 performance is likely to have benefited from the continued strong demand for home improvement projects, a robust housing market and ongoing investments. The company has been witnessing a rise in average ticket, driven by high-value purchases by home builders. This has been aiding comparable store sales.
On the last reported quarter’s earnings call, the company anticipated comps growth of 3% for fiscal 2022. For the fiscal fourth quarter, our model estimates 8.3% growth in average ticket, offset by a 7.9% decline in the number of customer transactions. Our model estimates comps growth of 0.2% for the fourth quarter and 3.2% for fiscal 2022.
HD is expected to have witnessed growth in the Pro and DIY customer categories, along with digital momentum, in the fiscal fourth quarter.
Home Depot has been witnessing significant benefits from the execution of its "One Home Depot" plan focused on expanding the supply chain, technology investments and digital enhancements. The company’s interconnected retail strategy and underlying technology infrastructure have been consistently boosting web traffic for the past few quarters. This is expected to have aided digital sales in the to-be-reported quarter.
However, Home Depot is likely to have witnessed continued cost pressures in fourth-quarter fiscal 2022, driven by the impacts of inflation, supply-chain dynamics and the consumer spending environment. Higher transportation costs and product mix are expected to have resulted in higher cost of goods sold in the fiscal fourth quarter, leading to a lower gross margin.
Further, the investments in its supply chain are expected to have marred the gross margin in the to-be-reported quarter. Higher inventory levels and interest expenses are expected to have been concerning.
On its last reported quarter’s earnings call, management expected the uncertainties relating to the supply-chain issues, inflation and the overall consumer environment to persist throughout fiscal 2022.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Home Depot has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.46%.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +1.96% and a Zacks Rank of 1. The company is likely to register top and bottom-line declines when it reports fourth-quarter fiscal 2022 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.5 billion, which suggests a decline of 2.5% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle’s earnings has moved up 11.1% to 30 cents per share in the past 30 days. The consensus estimate indicates a 14.3% decline from the year-ago quarter’s reported figure.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +1.37% and a Zacks Rank of 2. The company is likely to register growth in the bottom line when it reports fourth-quarter fiscal 2022 numbers. The consensus mark for BURL’s quarterly earnings has been unchanged in the past 30 days at $2.71 per share. The consensus estimate suggests 7.1% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Burlington Stores’ quarterly revenues is pegged at $2.6 billion, which suggests a decline of 0.4% from the figure reported in the prior-year quarter.
Builders FirstSource (BLDR - Free Report) currently has an Earnings ESP of +26.09% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports fourth-quarter 2022 results. The consensus mark for BLDR’s quarterly revenues is pegged at $4.2 billion, which suggests an 8.7% decline from the figure reported in the prior-year quarter.
The consensus mark for BLDR’s quarterly earnings has moved up 4.4% in the past 30 days to $2.37 per share. The consensus estimate suggests a decline of 14.8% from the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.