The Home Depot Inc. (HD - Free Report) reported better-than-expected top- and bottom-line results for second-quarter fiscal 2016, gaining from the persistent strength in the housing market. With this, the company retained its four-year long trend of beating earnings estimates. Not only this, the company reached a key milestone in the quarter, recording the highest quarterly sales and net earnings.
The company posted fiscal second-quarter adjusted earnings of $1.97 per share, which jumped 13.9% from the year-ago quarter and beat the Zacks Consensus Estimate of $1.96.
Quarterly Details
Net sales advanced 6.6% to $26,472 million from $24,829 million in the year-ago quarter. The top line also marginally beat the Zacks Consensus Estimate of $26,437.2 million. The company's overall comparable-store sales (comps) increased 4.7%, while comps in the U.S. grew 5.4%. Sales gained from enhanced spending on home improvement products.
Gross profit in the reported quarter improved 6.7% to $8,927 million from $8,365 million in the year-ago quarter, primarily driven by higher sales. However, gross profit margin remained flat at 33.7%.
Improved gross profit led operating income to soar 12.5% to $4,103 million during the fiscal quarter. Further, operating margin expanded 80 bps from the year-ago quarter to 15.5%.
Balance Sheet and Cash Flow
Home Depot ended the fiscal second quarter with cash and cash equivalents of $4,018 million, long-term debt (excluding current maturities) of $20,900 million, and shareholders' equity of $6,657 million. In the first half of fiscal 2016, the company had generated $6,877 million of net cash from operations.
Fiscal 2016 Outlook
Following the robust fiscal second quarter, Home Depot reiterated its sales and comps guidance, while it raised its earnings forecasts for fiscal 2016. The company continues to project sales growth of 6.3%, with about 4.9% improvement in comps.
Home Depot now envisions diluted earnings per share to grow about 15.6% year over year to $6.31. The company had earlier expected earnings per share of $6.27, up 14.8% year over year.
Zacks Rank
Currently, Home Depot carries a Zacks Rank #2 (Buy). Other well-placed stocks in the same industry are Lowe's Companies Inc. (LOW - Free Report) and BMC Stock Holdings Inc. , each carrying the same rank as Home Depot. Another stock worth considering in the broader retail sector is Big 5 Sporting Goods Inc. (BGFV - Free Report) , also with a Zacks Rank #2.
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The Home Depot Inc. (HD - Free Report) reported better-than-expected top- and bottom-line results for second-quarter fiscal 2016, gaining from the persistent strength in the housing market. With this, the company retained its four-year long trend of beating earnings estimates. Not only this, the company reached a key milestone in the quarter, recording the highest quarterly sales and net earnings.
The company posted fiscal second-quarter adjusted earnings of $1.97 per share, which jumped 13.9% from the year-ago quarter and beat the Zacks Consensus Estimate of $1.96.
Quarterly Details
Net sales advanced 6.6% to $26,472 million from $24,829 million in the year-ago quarter. The top line also marginally beat the Zacks Consensus Estimate of $26,437.2 million. The company's overall comparable-store sales (comps) increased 4.7%, while comps in the U.S. grew 5.4%. Sales gained from enhanced spending on home improvement products.
Gross profit in the reported quarter improved 6.7% to $8,927 million from $8,365 million in the year-ago quarter, primarily driven by higher sales. However, gross profit margin remained flat at 33.7%.
Improved gross profit led operating income to soar 12.5% to $4,103 million during the fiscal quarter. Further, operating margin expanded 80 bps from the year-ago quarter to 15.5%.
Balance Sheet and Cash Flow
Home Depot ended the fiscal second quarter with cash and cash equivalents of $4,018 million, long-term debt (excluding current maturities) of $20,900 million, and shareholders' equity of $6,657 million. In the first half of fiscal 2016, the company had generated $6,877 million of net cash from operations.
Fiscal 2016 Outlook
Following the robust fiscal second quarter, Home Depot reiterated its sales and comps guidance, while it raised its earnings forecasts for fiscal 2016. The company continues to project sales growth of 6.3%, with about 4.9% improvement in comps.
Home Depot now envisions diluted earnings per share to grow about 15.6% year over year to $6.31. The company had earlier expected earnings per share of $6.27, up 14.8% year over year.
Zacks Rank
Currently, Home Depot carries a Zacks Rank #2 (Buy). Other well-placed stocks in the same industry are Lowe's Companies Inc. (LOW - Free Report) and BMC Stock Holdings Inc. , each carrying the same rank as Home Depot. Another stock worth considering in the broader retail sector is Big 5 Sporting Goods Inc. (BGFV - Free Report) , also with a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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