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Why Is Home Depot (HD) Down 2.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Home Depot (HD - Free Report) . Shares have lost about 2.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Home Depot Surpasses Q2 Earnings & Sales Estimates
Home Depot reported solid second-quarter fiscal 2023 results, wherein both the top and the bottom lines exceeded the Zacks Consensus Estimate but declined year over year. Results gained from strength in categories associated with smaller projects. On the flip side, continued pressure in certain big-ticket, discretionary categories acted as a deterrent.
Home Depot's earnings of $4.65 per share declined 8% from $5.05 registered in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of $4.46.
Net sales fell 2% to $42,916 million from $43,792 million in the year-ago quarter. The metric beat the Zacks Consensus Estimate of $42,248 million.
Home Depot's comparable sales fell 2% in the reported quarter. The company’s comparable sales in the United States declined 2%. Comps were impacted by a decline in customer transactions, partly offset by a rise in average ticket. Customer transactions declined 1.8% year over year, while the average ticket rose 0.1%. Sales per retail square foot were down 2.3%.
In dollar terms, the gross profit dipped 2.3% to $14,157 million from $14,483 million in the year-ago quarter. Operating income fell 8.6% year over year to $6,589 million.
Selling, general and administrative expenses of $6,915 million grew 3.9% from the $6,657 million reported in the year-ago quarter.
Other Updates
Home Depot ended second-quarter fiscal 2023 with cash and cash equivalents of $2,814 million, long-term debt (excluding current installments) of $40,754 million, and shareholders' equity of $1,335 million. In the six months ending Jul 30, 2023, the company generated $12,205 million of net cash from operations.
Also, it approved a new $15 billion share repurchase program valid from Aug 15, 2023.
Fiscal 2023 View
Management retained its view for fiscal 2023. Home Depot anticipates sales and comparable sales to decline 2-5% year over year in fiscal 2023. The operating margin is estimated in the range of 14-14.3%.
The company expects an effective tax rate of 24.5% in fiscal 2023. Interest expenses are likely to be $1.8 billion in fiscal 2023. HD estimates earnings per share to decline 7-13% year over year in fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Home Depot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Home Depot (HD) Down 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Home Depot (HD - Free Report) . Shares have lost about 2.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Home Depot Surpasses Q2 Earnings & Sales Estimates
Home Depot reported solid second-quarter fiscal 2023 results, wherein both the top and the bottom lines exceeded the Zacks Consensus Estimate but declined year over year. Results gained from strength in categories associated with smaller projects. On the flip side, continued pressure in certain big-ticket, discretionary categories acted as a deterrent.
Home Depot's earnings of $4.65 per share declined 8% from $5.05 registered in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of $4.46.
Net sales fell 2% to $42,916 million from $43,792 million in the year-ago quarter. The metric beat the Zacks Consensus Estimate of $42,248 million.
Home Depot's comparable sales fell 2% in the reported quarter. The company’s comparable sales in the United States declined 2%. Comps were impacted by a decline in customer transactions, partly offset by a rise in average ticket. Customer transactions declined 1.8% year over year, while the average ticket rose 0.1%. Sales per retail square foot were down 2.3%.
In dollar terms, the gross profit dipped 2.3% to $14,157 million from $14,483 million in the year-ago quarter. Operating income fell 8.6% year over year to $6,589 million.
Selling, general and administrative expenses of $6,915 million grew 3.9% from the $6,657 million reported in the year-ago quarter.
Other Updates
Home Depot ended second-quarter fiscal 2023 with cash and cash equivalents of $2,814 million, long-term debt (excluding current installments) of $40,754 million, and shareholders' equity of $1,335 million. In the six months ending Jul 30, 2023, the company generated $12,205 million of net cash from operations.
Also, it approved a new $15 billion share repurchase program valid from Aug 15, 2023.
Fiscal 2023 View
Management retained its view for fiscal 2023. Home Depot anticipates sales and comparable sales to decline 2-5% year over year in fiscal 2023. The operating margin is estimated in the range of 14-14.3%.
The company expects an effective tax rate of 24.5% in fiscal 2023. Interest expenses are likely to be $1.8 billion in fiscal 2023. HD estimates earnings per share to decline 7-13% year over year in fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Home Depot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.