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Home Depot (HD) Q1 Earnings: Stock Likely to Beat Again?
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We expect home improvement retailer, The Home Depot, Inc. (HD - Free Report) to beat expectations when it reports first-quarter fiscal 2017 results on May 16.
Home Depot outperformed the Zacks Consensus Estimate by an average of 4.4% in the trailing four quarters, with a beat in each quarter. The Zacks Consensus Estimate for both, the first-quarter and fiscal 2017 have witnessed an uptrend over the last 30 days. Further, the current Zacks Consensus Estimate of $1.61 per share for the first quarter reflects a year-over-year increase of 11.7%. Moreover, analysts polled by Zacks expect revenues of $23.7 billion, up nearly 4.1% from the year-ago quarter. So, let’s see how things are shaping up for this announcement.
Our proven model shows that Home Depot may beat earnings because it has the right combination of the two key components.
Zacks ESP: Home Depot currently has an Earnings ESP of +1.24%. This is because the Most Accurate estimate is $1.63, while the Zacks Consensus Estimate is pegged lower at $1.61. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Home Depot currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Home Depot’s Zacks Rank #2 and a positive ESP make us reasonably confident of a positive earnings beat.
What's Driving the Better-than-Expected Earnings?
Home Depot’s shares jumped 13.4% over the past three months, outperforming the Zacks categorized Retail – Wholesale sector’s growth of 9%.
The company has been riding on constant gains from improving customer experience, solid execution and housing market recovery. Also, these factors helped the company to post better-than-expected bottom-line results in the last quarter, retaining its four-year long trend of beating earnings estimates. Further, Home Depot remains focused on developing merchandising tools and increasing investment in e-commerce to boost top-line growth and enhance market share.
Backed by these factors and strong earnings history, Home Depot provided a robust guidance for fiscal 2017 and updated its capital allocation strategy, which called for a higher long-term dividend payout target of 55% of net earnings. These factors usher in confidence about the company’s ongoing prospects thus making us optimistic about its upcoming results.
Other Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:
Lowe's Companies, Inc. (LOW - Free Report) , slated to release earnings on May 24, currently has an Earnings ESP of +2.83% and a Zacks Rank #3 (Hold).
Best Buy Co., Inc. (BBY - Free Report) , slated to release earnings on May 25, currently has an Earnings ESP of +12.50% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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Home Depot (HD) Q1 Earnings: Stock Likely to Beat Again?
We expect home improvement retailer, The Home Depot, Inc. (HD - Free Report) to beat expectations when it reports first-quarter fiscal 2017 results on May 16.
Home Depot outperformed the Zacks Consensus Estimate by an average of 4.4% in the trailing four quarters, with a beat in each quarter. The Zacks Consensus Estimate for both, the first-quarter and fiscal 2017 have witnessed an uptrend over the last 30 days. Further, the current Zacks Consensus Estimate of $1.61 per share for the first quarter reflects a year-over-year increase of 11.7%. Moreover, analysts polled by Zacks expect revenues of $23.7 billion, up nearly 4.1% from the year-ago quarter. So, let’s see how things are shaping up for this announcement.
Home Depot, Inc. (The) Price and EPS Surprise
Home Depot, Inc. (The) Price and EPS Surprise | Home Depot, Inc. (The) Quote
Why a Likely Positive Surprise?
Our proven model shows that Home Depot may beat earnings because it has the right combination of the two key components.
Zacks ESP: Home Depot currently has an Earnings ESP of +1.24%. This is because the Most Accurate estimate is $1.63, while the Zacks Consensus Estimate is pegged lower at $1.61. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Home Depot currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
The combination of Home Depot’s Zacks Rank #2 and a positive ESP make us reasonably confident of a positive earnings beat.
What's Driving the Better-than-Expected Earnings?
Home Depot’s shares jumped 13.4% over the past three months, outperforming the Zacks categorized Retail – Wholesale sector’s growth of 9%.
The company has been riding on constant gains from improving customer experience, solid execution and housing market recovery. Also, these factors helped the company to post better-than-expected bottom-line results in the last quarter, retaining its four-year long trend of beating earnings estimates. Further, Home Depot remains focused on developing merchandising tools and increasing investment in e-commerce to boost top-line growth and enhance market share.
Backed by these factors and strong earnings history, Home Depot provided a robust guidance for fiscal 2017 and updated its capital allocation strategy, which called for a higher long-term dividend payout target of 55% of net earnings. These factors usher in confidence about the company’s ongoing prospects thus making us optimistic about its upcoming results.
Other Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:
Wal-Mart Stores, Inc. (WMT - Free Report) , scheduled to release earnings on May 18, currently has an Earnings ESP of +1.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lowe's Companies, Inc. (LOW - Free Report) , slated to release earnings on May 24, currently has an Earnings ESP of +2.83% and a Zacks Rank #3 (Hold).
Best Buy Co., Inc. (BBY - Free Report) , slated to release earnings on May 25, currently has an Earnings ESP of +12.50% and a Zacks Rank #2.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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