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Why Is Home Depot (HD) Up 11.4% 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 added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Home Depot due for a pullback? 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 Beats on Q3 Earnings and Sales Estimates
Home Depot reported solid third-quarter fiscal 2023 results, wherein both the top and bottom lines exceeded the Zacks Consensus Estimate but declined year over year. Results gained from strength in categories associated with smaller projects. Meanwhile, continued pressure in certain big-ticket, discretionary categories acted as a deterrent.
Home Depot's earnings of $3.81 per share declined 10% from $4.24 registered in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of $3.76.
Net sales fell 3% to $37,710 million from $38,872 million in the year-ago quarter. However, the metric beat the Zacks Consensus Estimate of $37,523 million.
Home Depot's comparable sales fell 3.1% in the reported quarter. The company’s comparable sales in the United States declined 3.5%. Comps were impacted by a decrease in customer transactions and average tickets. Customer transactions declined 2.4% year over year, while the average ticket rose 0.3%. Sales per retail square foot were down 3.7%.
In dollar terms, the gross profit decreased 3.7% to $12,738 million from $13,224 million in the year-ago quarter. The operating income fell 12.1% year over year to $5,406 million.
SG&A expenses of $6,649 million grew 2.8% from the $6,468 million reported in the year-ago quarter.
Other Updates
Home Depot ended the third quarter of fiscal 2023 with cash and cash equivalents of $2,058 million, long-term debt (excluding current installments) of $40,567 million and shareholders' equity of $1,430 million. In the nine months ended Oct 29, 2023, the company generated $16,439 million of net cash from operations.
Fiscal 2023 View
Management narrowed its view for fiscal 2023. Home Depot now anticipates sales and comparable sales to decline in the range of 3-4% compared with the earlier guidance of a 2-5% year-over-year decline.
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 9-11% compared with the previously communicated view of a 7-13% decrease year over year in fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Home Depot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Home Depot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Home Depot belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Builders FirstSource (BLDR - Free Report) , has gained 20.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Builders FirstSource reported revenues of $4.53 billion in the last reported quarter, representing a year-over-year change of -21.3%. EPS of $4.24 for the same period compares with $5.20 a year ago.
Builders FirstSource is expected to post earnings of $2.73 per share for the current quarter, representing a year-over-year change of -15%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.3%.
Builders FirstSource has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Home Depot (HD) Up 11.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Home Depot (HD - Free Report) . Shares have added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Home Depot due for a pullback? 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 Beats on Q3 Earnings and Sales Estimates
Home Depot reported solid third-quarter fiscal 2023 results, wherein both the top and bottom lines exceeded the Zacks Consensus Estimate but declined year over year. Results gained from strength in categories associated with smaller projects. Meanwhile, continued pressure in certain big-ticket, discretionary categories acted as a deterrent.
Home Depot's earnings of $3.81 per share declined 10% from $4.24 registered in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of $3.76.
Net sales fell 3% to $37,710 million from $38,872 million in the year-ago quarter. However, the metric beat the Zacks Consensus Estimate of $37,523 million.
Home Depot's comparable sales fell 3.1% in the reported quarter. The company’s comparable sales in the United States declined 3.5%. Comps were impacted by a decrease in customer transactions and average tickets. Customer transactions declined 2.4% year over year, while the average ticket rose 0.3%. Sales per retail square foot were down 3.7%.
In dollar terms, the gross profit decreased 3.7% to $12,738 million from $13,224 million in the year-ago quarter. The operating income fell 12.1% year over year to $5,406 million.
SG&A expenses of $6,649 million grew 2.8% from the $6,468 million reported in the year-ago quarter.
Other Updates
Home Depot ended the third quarter of fiscal 2023 with cash and cash equivalents of $2,058 million, long-term debt (excluding current installments) of $40,567 million and shareholders' equity of $1,430 million. In the nine months ended Oct 29, 2023, the company generated $16,439 million of net cash from operations.
Fiscal 2023 View
Management narrowed its view for fiscal 2023. Home Depot now anticipates sales and comparable sales to decline in the range of 3-4% compared with the earlier guidance of a 2-5% year-over-year decline.
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 9-11% compared with the previously communicated view of a 7-13% decrease year over year in fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Home Depot has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Home Depot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Home Depot belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Builders FirstSource (BLDR - Free Report) , has gained 20.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Builders FirstSource reported revenues of $4.53 billion in the last reported quarter, representing a year-over-year change of -21.3%. EPS of $4.24 for the same period compares with $5.20 a year ago.
Builders FirstSource is expected to post earnings of $2.73 per share for the current quarter, representing a year-over-year change of -15%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.3%.
Builders FirstSource has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.