Home Depot earnings beat despite wet start to spring

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Home Depot on Tuesday reported fiscal first-quarter earnings that beat analysts’ expectations, as shoppers spent more in its stores, despite a damp start to the spring in much of the U.S.

Here’s how the company did, compared to what Wall Street expected, according to Refinitiv consensus estimates

  • Earnings per share: $2.27, vs. $2.18 expected
  • Revenue: $26.381 billion, vs. $26.378 expected

Sales at stores open at least 12 months rose 2.5% on a global basis and were up 3.0% in the U.S.

Home Depot shares were up less than a percent in premarket trade.

“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,” Home Depot CEO and president Craig Menear said in a company release.

Home Depot said customer transactions were up 3.8% during the quarter, while the average shopper’s ticket increased 2.0%, and sales per square foot were up 5.6%.

The company reaffirmed its guidance for fiscal 2019.

Last quarter, Home Depot slashed its 2019 guidance citing slowing growth in the housing market. At the time, the company said it expected to earn $10.03 per share this year, 23 cents a share less than analysts’ prior estimates. It has forecast same-store sales growth of 5% in fiscal 2019 and revenue growth of 3.3%.

Home-builder and consumer confidence has been upbeat in May, despite an escalating trade war with China.

Retailers like Home Depot and rival Lowe’s are well positioned in the current environment, Oppenheimer’s Brian Nagel said in a note to clients on Monday.

“In our view, a recent, substantial slide in mortgage rates should lead to a steady re-strengthening in key housing metrics, thereby supporting improved sales and, maybe more importantly, undermining meaningfully the still negative market narrative weighing upon multiples within the space,” Nagel said. “We are optimistic that as weather turns more spring-like, sales of seasonal merchandise will improve, perhaps markedly.”

As of Monday’s market close, Home Depot shares, which have a market value of $210.6 billion, are up more than 11% this year and up less than a percent over the past 12 months. Lowe’s, which is set to report earnings before the bell Wednesday, is up 18% since January and 24% over the past 12 months. It has a market cap of $86.9 billion.

Correction: It is unclear how Home Depot same-store sales compare with estimates, since the company reported its results on a 52-week basis. Last year, its fiscal first quarter had 53 weeks. An earlier headline said same-store sales fell short.


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