The Home Depot, Inc. (HD) 2Q Earnings Beat Estimates

The Home Depot, Inc. (NYSE:HD) posted its second earnings which beat analysts’ expectations, and the company has also raised its annual forecast backed by the surge in shoppers due to recovery in housing segment.

The Home Depot, Inc. (HD) 2Q Earnings Beat Estimates

Strong numbers

For the quarter, net income shot up 17 percent to $1.8 billion, or $1.24 per share, compared to $1.53 billion, or $1.01 in the previous year. Analysts expected net income of $1.21, the average of 25 estimates in a Bloomberg survey.

Revenue for The Home Depot, Inc. (NYSE:HD) came in at $22.5 billion, an increase of 9.5 percent, beating the analysts’ expectation of $21.8 billion. Sales increased 10.7 percent for the stores open at least a year, which is the most since the increase of 11 percent in the second quarter of 1999 according to Stephen Holmes, a Home Depot spokesman.

Strategies that helped Home Depot

Chief Executive Officer Frank Blake enhanced the retailer’s distribution and merchandising segment resulting in higher comparable store sales over the past 14 years. Cost cuts were also implemented when there was a downturn in the market. With home prices once again reviving, consumers are shelling out more money, which was reflected in an increase by 4.3 percent to $57.39 on an average purchase made at Home Depot.

John Tomlinson, an analyst at ITG Investment Research in New York said, “They’ve done a fantastic job over the past three or four years managing inventories and controlling expenses.” The analyst also said that Home Depot is benefiting from the recovery of the housing market as people tend to invest more in their homes with recovery and stability of home prices.

The Home Depot, Inc. (NYSE:HD) has achieved much of its growth by enhancing customer services and alluring buyers with better prices compared to rivals. Additionally, it has also customized its marketing campaigns to suit the local areas, and has created more jobs where workers directly serve customers.

Home Depot ups full year guidance

The housing market has been recovering in the geographies where Home Depot has dominance like in Arizona and Nevada. Home Depot claimed in May that rate of growth in sales to contractors and professional customers was higher than individual home owners and other shoppers for the first time after 2008.

For the full year, The Home Depot, Inc. (NYSE:HD) is expecting profit to come in at $3.60 per share from the previous forecast of $3.52. Analysts on the other hand are expecting a profit of $3.64.

Shares of The Home Depot, Inc. (NYSE:HD) gained 22 percent this year compared to 15 percent gain for the Standard & Poor’s 500 index.