Photo Credit: Mike Mozart

The Home Depot, Inc. (HD) Consumer Discretionary - Specialty Retail | Reports May 17, Before Market Opens

Key Takeaways

• The Estimize consensus is calling for earnings per share of $1.35 on $22.15 billion in revenue, 2 cents higher than Wall Street on the bottom line and $70 million on the top
• Home Depot’s strategic initiatives to improve customer experience and expand its omni channel capabilities have paid off
• The housing recovery has also played a major part in Home Depot strong growth
• What are you expecting for HD? Get your estimate in here!

Home improvement retailer, Home Depot, is scheduled to report first quarter earnings Tuesday, before the market opens. Home Depot is on an upward trajectory as of late and after strong fourth quarter earnings, expectations are high coming into Q1 results. The company issued strong guidance for 2016 with sales expected to be up as much as 6% and comp sales increasing approximately 4.5%, leading to an uptrend in estimates. Home Depot’s increased focus on omni channel capabilities and merchandise tools coupled with a persistent housing recovery has started to pay off. This quarter should feature similar double digit gains on the bottom line with modest sales growth.

The Estimize consensus is calling for earnings per share of $1.35 on $22.15 billion in revenue, 2 cents higher than Wall Street on the bottom line and $70 million on the top. Compared to a year earlier, this reflects a 16% increase in earnings while sales could climb as much as 6%. Typically the stock does well during earnings season which is icing on the cake for shareholders that have seen shares increase 20% in the past 12 months. 

The improvements Home Depot has made across the board have all paid off in the form of strong earnings. The company has implemented significant changes in its store operations to make them simpler and more customer friendly. Furthermore, Home Depot has expanded its omni channel capabilities in response to the evolving retail environment. Online sales last quarter grew 23% to nearly $1.25 billion. Nearly 40% of online orders are picked up from stores which creates store sales. To top it all off, Home Depot maintains a strong balance sheet, allowing them to issue generous dividend payments.

That said, it won’t all be smooth sailing for Home Depot. US consumers are being choosy with how they spend their hard earned dollars. In the current environment of appreciating home prices, homeowners do tend to invest more in their properties, but a lot of that relies on a stable jobs environment going forward. If wage growth stays as suppressed as it has been, spending on big remodeling projects may be fewer and far between.