We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Home Depot (HD) Down 3.2% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Home Depot (HD - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Home Depot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Home Depot Q3 Earnings Beat, Raises FY18 View
Home Depot posted top- and bottom-line beat in third-quarter fiscal 2018. Notably, the company retained its five-year-long trend of beating earnings estimates. Moreover, the company delivered positive sales surprise in eight out of the last nine quarters.
The company posted fiscal third-quarter earnings of $2.51 per share, which escalated 36.4% from $1.84 recorded in the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate of $2.27.
Results gained from strength in both professional and do-it-yourself categories. Further, the company benefited from positive customer response for its assortments as well as enhancements to drive interconnected shopping experience. Home Depot is witnessing strength across store operations while delivering solid digital growth. This reflects persistently strong customer demand in the home improvement markets.
Quarterly Details
Net sales grew 5.1% to $26,302 million from $25,026 million in the year-ago quarter and beat the Zacks Consensus Estimate of $26,235 million. The company's overall comparable-store sales (comps) increased 4.8% while comps in the United States grew 5.4%.
During the reported quarter, comps benefited from 3.6% rise in average ticket and 1.4% increase in customer transactions. Moreover, sales per square foot rose 5.2%.
Gross profit margin expanded 20 basis points (bps) to 34.8%. In dollar terms, gross profit improved 9.6% to $9,151 million from $8,648 million in the year-ago quarter, primarily driven by higher sales. Excluding the impact of the ASU No. 2014-09 revenue recognition standards adopted in first-quarter fiscal 2018, gross margin was 34.3%.
Operating income increased 5.2% to $3,870 million while operating margin expanded 10 bps year over year to 14.7%.
Balance Sheet and Cash Flow
Home Depot ended third-quarter fiscal 2018 with cash and cash equivalents of $1,764 million, long-term debt (excluding current maturities) of $23,332 million and shareholders' equity of $1,320 million. In the nine months ended on Oct 28, 2018, the company generated $10,036 million of net cash from operations.
Outlook
Backed by solid year-to-date performance, the company has raised its earnings and sales forecast for fiscal 2018.
Home Depot now expects sales growth of nearly 7.2% for fiscal 2018, including the 53rd week. The company earlier anticipated sales growth of 7%. Comps growth is now estimated to be 5.5% (for the comparable 52-week period) versus 5.3% increase stated earlier. Further, the company anticipates earnings per share of $9.75 for fiscal 2018, up nearly 33.8%. Earlier, it projected earnings per share growth of 29.2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Home Depot has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Home Depot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Home Depot (HD) Down 3.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Home Depot (HD - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Home Depot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Home Depot Q3 Earnings Beat, Raises FY18 View
Home Depot posted top- and bottom-line beat in third-quarter fiscal 2018. Notably, the company retained its five-year-long trend of beating earnings estimates. Moreover, the company delivered positive sales surprise in eight out of the last nine quarters.
The company posted fiscal third-quarter earnings of $2.51 per share, which escalated 36.4% from $1.84 recorded in the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate of $2.27.
Results gained from strength in both professional and do-it-yourself categories. Further, the company benefited from positive customer response for its assortments as well as enhancements to drive interconnected shopping experience. Home Depot is witnessing strength across store operations while delivering solid digital growth. This reflects persistently strong customer demand in the home improvement markets.
Quarterly Details
Net sales grew 5.1% to $26,302 million from $25,026 million in the year-ago quarter and beat the Zacks Consensus Estimate of $26,235 million. The company's overall comparable-store sales (comps) increased 4.8% while comps in the United States grew 5.4%.
During the reported quarter, comps benefited from 3.6% rise in average ticket and 1.4% increase in customer transactions. Moreover, sales per square foot rose 5.2%.
Gross profit margin expanded 20 basis points (bps) to 34.8%. In dollar terms, gross profit improved 9.6% to $9,151 million from $8,648 million in the year-ago quarter, primarily driven by higher sales. Excluding the impact of the ASU No. 2014-09 revenue recognition standards adopted in first-quarter fiscal 2018, gross margin was 34.3%.
Operating income increased 5.2% to $3,870 million while operating margin expanded 10 bps year over year to 14.7%.
Balance Sheet and Cash Flow
Home Depot ended third-quarter fiscal 2018 with cash and cash equivalents of $1,764 million, long-term debt (excluding current maturities) of $23,332 million and shareholders' equity of $1,320 million. In the nine months ended on Oct 28, 2018, the company generated $10,036 million of net cash from operations.
Outlook
Backed by solid year-to-date performance, the company has raised its earnings and sales forecast for fiscal 2018.
Home Depot now expects sales growth of nearly 7.2% for fiscal 2018, including the 53rd week. The company earlier anticipated sales growth of 7%. Comps growth is now estimated to be 5.5% (for the comparable 52-week period) versus 5.3% increase stated earlier. Further, the company anticipates earnings per share of $9.75 for fiscal 2018, up nearly 33.8%. Earlier, it projected earnings per share growth of 29.2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Home Depot has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Home Depot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.