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Home Depot (HD) Keeps Earnings Beat Trend in Q4, Guides FY18
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The Home Depot, Inc. (HD - Free Report) reported an upbeat fourth-quarter fiscal 2017, continuing with its five-year-long trend of beating earnings estimates. Further, sales topped estimates for the sixth straight quarter and also grew year over year.
Following the solid close of the fiscal year, the company provided an optimistic view for fiscal 2018. Concurrently, it reiterated its financial targets for fiscal 2020 while updating the return on invested capital target to reflect the impact of the Tax Cuts and Jobs Act of 2017.
Shares of this home improvement retailer displayed a growth of 2.4% in the pre-market session following the earnings release. Overall, it has returned a solid 28.9% in the past year, outperforming the industry’s growth of 24.7%.
The company posted fiscal fourth-quarter adjusted earnings of $1.69 per share, which escalated 17.4% from $1.44 recorded in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $1.62.
Home Depot, Inc. (The) Price, Consensus and EPS Surprise
Results gained from strength in the company’s core business. Its relentless focus on affording innovative products, boosting interconnected customer experience and driving productivity seems to be paying off. Further, the company continued to reap the benefits of a steady housing market recovery and strong customer demand.
Quarterly Details
Net sales grew 7.5% to $23,883 million from $22,207 million in the year-ago quarter. Moreover, the top line surpassed the Zacks Consensus Estimate of $23,655 million. The company's overall comparable-store sales (comps) increased 7.5%, while comps in the United States grew 7.2%.
During the quarter, comps benefited from 2% growth in customer transactions and 5.5% increase in average ticket. Moreover, sales per square-feet rose 7.8%.
Gross profit margin in the reported quarter contracted 10 basis points (bps) to 33.9%. In dollar terms, gross profit improved 7.1% to $8,093 million from $7,553 million in the year-ago quarter, primarily driven by higher sales.
Operating income increased 9% to $3,189 million while operating margin expanded 40 bps from the year-ago quarter to 13.6%.
Balance Sheet and Cash Flow
Home Depot ended fiscal 2017 with cash and cash equivalents of $3,595 million, long-term debt (excluding current maturities) of $24,267 million and shareholders' equity of $1,454 million. In fiscal 2017, the company generated $12,031 million of net cash from operations.
Concurrently, the company declared a 15.7% increase in its quarterly dividend to $1.03 per share. This marked the company’s ninth straight year of dividend hike. The new dividend is payable on Mar 22, to shareholders with record as on Mar 8.
Outlook
Following the solid end of fiscal 2017, Home Depot initiated its sales and earnings guidance for fiscal 2018. The company’s operating results for fiscal 2018 will include an additional 53rd week compared with fiscal 2017. Further, the company reaffirmed its financial targets for fiscal 2020 while it updated the return on invested capital target to reflect the impact of the Tax Cuts and Jobs Act of 2017.
The company expects sales growth of nearly 6.5% in fiscal 2018, including about $1.6 billion sales contribution from the 53rd week. This will be accompanied by 5% increase in comps. Calculations for comps will be on a 52-week comparable basis.
Other assumptions driving the company guidance include gross margin of nearly 34% and operating margin of about 14.5%. Further, the company expects a tax rate of nearly 26%. Moreover, the company expects to spend nearly $2.5 billion in capital expenditures and generate cash flows of about $14.1 billion.
Consequently, the company estimates earnings per share for fiscal 2018 to be up nearly 28% to $9.31. The guidance includes $4-billion impact from share repurchases.
For fiscal 2020, the company continues to anticipate total sales in the range of $115-$120 billion, with compounded annual sales growth of nearly 4.5-6%. Operating margin is expected to be in the range of 14.4-15%. Moreover, the company expects annual average capital spending to be about 2.5% of sales.
The company now expects a return on invested capital to be more than 40%, reflecting the impact of the new tax reform.
Beacon Roofing has gained 37.2% in the last six months. Moreover, it has a long-term earnings growth rate of 18.8%.
Fastenal, with a long-term earnings growth rate of 14%, gained 37% in the last six months.
Lowe’s Companies, with a long-term earnings growth rate of 18.4%, has improved 30.4% in the last six months.
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Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
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Home Depot (HD) Keeps Earnings Beat Trend in Q4, Guides FY18
The Home Depot, Inc. (HD - Free Report) reported an upbeat fourth-quarter fiscal 2017, continuing with its five-year-long trend of beating earnings estimates. Further, sales topped estimates for the sixth straight quarter and also grew year over year.
Following the solid close of the fiscal year, the company provided an optimistic view for fiscal 2018. Concurrently, it reiterated its financial targets for fiscal 2020 while updating the return on invested capital target to reflect the impact of the Tax Cuts and Jobs Act of 2017.
Shares of this home improvement retailer displayed a growth of 2.4% in the pre-market session following the earnings release. Overall, it has returned a solid 28.9% in the past year, outperforming the industry’s growth of 24.7%.
The company posted fiscal fourth-quarter adjusted earnings of $1.69 per share, which escalated 17.4% from $1.44 recorded in the year-ago quarter. The figure also beat the Zacks Consensus Estimate of $1.62.
Home Depot, Inc. (The) Price, Consensus and EPS Surprise
Home Depot, Inc. (The) Price, Consensus and EPS Surprise | Home Depot, Inc. (The) Quote
Results gained from strength in the company’s core business. Its relentless focus on affording innovative products, boosting interconnected customer experience and driving productivity seems to be paying off. Further, the company continued to reap the benefits of a steady housing market recovery and strong customer demand.
Quarterly Details
Net sales grew 7.5% to $23,883 million from $22,207 million in the year-ago quarter. Moreover, the top line surpassed the Zacks Consensus Estimate of $23,655 million. The company's overall comparable-store sales (comps) increased 7.5%, while comps in the United States grew 7.2%.
During the quarter, comps benefited from 2% growth in customer transactions and 5.5% increase in average ticket. Moreover, sales per square-feet rose 7.8%.
Gross profit margin in the reported quarter contracted 10 basis points (bps) to 33.9%. In dollar terms, gross profit improved 7.1% to $8,093 million from $7,553 million in the year-ago quarter, primarily driven by higher sales.
Operating income increased 9% to $3,189 million while operating margin expanded 40 bps from the year-ago quarter to 13.6%.
Balance Sheet and Cash Flow
Home Depot ended fiscal 2017 with cash and cash equivalents of $3,595 million, long-term debt (excluding current maturities) of $24,267 million and shareholders' equity of $1,454 million. In fiscal 2017, the company generated $12,031 million of net cash from operations.
Concurrently, the company declared a 15.7% increase in its quarterly dividend to $1.03 per share. This marked the company’s ninth straight year of dividend hike. The new dividend is payable on Mar 22, to shareholders with record as on Mar 8.
Outlook
Following the solid end of fiscal 2017, Home Depot initiated its sales and earnings guidance for fiscal 2018. The company’s operating results for fiscal 2018 will include an additional 53rd week compared with fiscal 2017. Further, the company reaffirmed its financial targets for fiscal 2020 while it updated the return on invested capital target to reflect the impact of the Tax Cuts and Jobs Act of 2017.
The company expects sales growth of nearly 6.5% in fiscal 2018, including about $1.6 billion sales contribution from the 53rd week. This will be accompanied by 5% increase in comps. Calculations for comps will be on a 52-week comparable basis.
Other assumptions driving the company guidance include gross margin of nearly 34% and operating margin of about 14.5%. Further, the company expects a tax rate of nearly 26%. Moreover, the company expects to spend nearly $2.5 billion in capital expenditures and generate cash flows of about $14.1 billion.
Consequently, the company estimates earnings per share for fiscal 2018 to be up nearly 28% to $9.31. The guidance includes $4-billion impact from share repurchases.
For fiscal 2020, the company continues to anticipate total sales in the range of $115-$120 billion, with compounded annual sales growth of nearly 4.5-6%. Operating margin is expected to be in the range of 14.4-15%. Moreover, the company expects annual average capital spending to be about 2.5% of sales.
The company now expects a return on invested capital to be more than 40%, reflecting the impact of the new tax reform.
Zacks Rank
Currently, Home Depot carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry are Beacon Roofing Supply, Inc. (BECN - Free Report) with a Zacks Rank #1 (Strong Buy), Fastenal Company (FAST - Free Report) and Lowe’s Companies Inc. (LOW - Free Report) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Beacon Roofing has gained 37.2% in the last six months. Moreover, it has a long-term earnings growth rate of 18.8%.
Fastenal, with a long-term earnings growth rate of 14%, gained 37% in the last six months.
Lowe’s Companies, with a long-term earnings growth rate of 18.4%, has improved 30.4% in the last six months.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>