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Home Depot (HD) Beats on Earnings in Q4, Dividend Raised

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The Home Depot, Inc. (HD - Free Report) posted fourth-quarter fiscal 2022 results, with the top and bottom line increasing year over year. Earnings surpassed the Zacks Consensus Estimate while sales missed the Zacks Consensus Estimate

The company’s stock has lost 2.1% in the past three months compared with the industry's decline of 0.1%.

Results in Detail

Home Depot's earnings of $3.30 per share increased 2.8% from $3.21 registered in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $3.27 and our estimate of $3.19.

Net sales inched up 0.3% to $35,831 million from $35,719 million in the year-ago quarter. The metric missed the Zacks Consensus Estimate of $35,905.8 million but surpassed our estimate of $35,761.2 million.

Comparable sales inched down 0.3% in the reported quarter. The company’s comparable sales in the U.S. also went down 0.3%.

The Home Depot, Inc. Price, Consensus and EPS Surprise

 

The Home Depot, Inc. Price, Consensus and EPS Surprise

The Home Depot, Inc. price-consensus-eps-surprise-chart | The Home Depot, Inc. Quote

 

Home Depot's customer transactions declined 6% year over year. The average ticket rose 5.8%, while sales per retail square foot fell 0.1%.  

In dollar terms, the gross profit increased 0.5% to $11,926 million from $11,862 million in the year-ago quarter. The operating income fell 1.5% to $4,752 million.

Selling, general and administrative expenses came in at $6,549 million, up 1.8% from $6,431 million reported in the year-ago quarter.

Other Updates

The Zacks Rank #3 (Hold) company ended fourth-quarter fiscal 2022 with cash and cash equivalents of $2,757 million, long-term debt (excluding current installments) of $41,962 million, and shareholders' equity of $1,562 million. For the fiscal year ended Jan 29, 2023, the company generated $14,615 million of net cash from operations.

The company approved a 10% hike in its quarterly dividend to $2.09 per share, which equals to an annual dividend of $8.36 per share. The dividend is payable on Mar 23, 2023, to shareholders of record as on Mar 9. This marks the company’s 144th consecutive quarter of dividend payments.

Starting in the first quarter of fiscal 2023, the company will invest an incremental $1 billion in annualized compensation for frontline, hourly associates.

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Fiscal 2023 View

Home Depot anticipates sales growth and comparable sales growth to be roughly flat year over year in fiscal 2023. The operating margin rate is estimated to be 14.5%. It expects an effective tax rate of 24.5%. HD estimates earnings per share decline in the mid-single digits for fiscal 2023.

Solid Retail Bets

Some better-ranked stocks are Burlington Stores (BURL - Free Report) , The Kroger Co. (KR - Free Report) and American Eagle Outfitters (AEO - Free Report) .

Burlington Stores, which operates as a retailer of branded apparel products, carries a Zacks Rank #2 (Buy). BURL has a negative trailing four-quarter earnings surprise of 0.6%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Burlington’s current financial-year sales and earnings per share (EPS) suggests a decline of 8.3% and 52.3%, respectively, from the year-ago period.

The Kroger Co., a renowned departmental store retailer, presently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of 13.4%, on average.

The Zacks Consensus Estimate for The Kroger Co.’s current-year sales and EPS suggests growth of 7.5% and 12.2%, respectively, from the year-ago period’s reported numbers.

American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2. AEO delivered an earnings surprise of 82.6% in the last reported quarter.

The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 1.3% and 58.9%, respectively, from the year-ago reported figures.

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