Home Depot Posts Strong Sales, Credits Housing Market Recovery

Home Depot Posts Strong Sales, Credits Housing Market Recovery
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The Home Depot, Inc. (NYSE:HD) reported its latest quarterly results early this morning, coming out ahead of expectations and posting an 18 percent increase in net profits for its most recently completed quarter. It also raised its guidance for the full year, which is an important indication of the company’s expectations because management typically guides very conservative.

Home Depot Posts Strong Sales, Credits Housing Market Recovery

The Home Depot’s Results Vs. Consensus Estimates

A consensus of analysts polled by Thomson Reuters indicated that the chain was expected to report 77 cents per share on $18.89 billion in revenue for the quarter completed May 5. The Home Depot, Inc. (NYSE:HD)’s actual results were profits of 83 cents per share or $1.22 billion.

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In the same quarter a year ago, the chain reported profits of $1.04 billion or 68 cents per share. Sales for the first quarter of this year were up 7.4 percent to $19.1 billion. The chain also noted that the same quarter a year ago included a seasonal timing change which increased its sales by approximately $574 million.

The Home Depot, Inc. (NYSE:HD) also reported this morning that it was raising full-year earnings guidance to $3.52 from $3.37 per share.

Analysts From Credit Suisse

A research team from Credit Suisse analyzed these latest results from Home Depot. They said the chain “prudently controlled expenses” during a difficult economic climate, resulting in 132 basis points of expansion in earnings before interest and taxes and also 28 percent growth in earnings per share year over year.

Like Home Depot management, Credit Suisse analysts also mentioned the tailwind the chain received from the improving housing market. They’re expecting the company’s results to continue improving as the year goes on and believe that headwinds in any area of sales will likely be recouped rather than lost thanks to external tailwinds, both from the improving housing market and also rebuilding efforts from Hurricane Sandy.

Credit Suisse analysts raised their estimates for the company’s fiscal years 2013, 2014 and 2015 to $3.52 per share, $3.95 per share and $4.35 per share respectively. They also increased their target price from $78 per share to $85 per share and maintained their outperform rating on the stock.

Shares of The Home Depot, Inc. (NYSE:HD) rose as much as 3 percent after opening bell.

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