Second-quarter revenue for Home Depot (HD) was a bit lighter than analysts expected, but earnings growth met views, the home improvement retailer said Tuesday.
Seen as a bellwether for housing and the economy, Home Depot reported 6.6% higher revenue at $26.47 billion — a shade below the $26.49 billion analyst view — and a 15.8% rise in earnings per share to $1.97. Comparable store sales were up 4.7% and comp sales for U.S. stores 5.4%.
“We had a solid quarter, achieving the highest quarterly sales and net earnings results in company history as housing continues to be a tailwind for our business,” President and Chief Executive Craig Menear said in a prepared statement.
The earnings announcement came as housing starts for the month of July were reported at 1.21 million, topping consensus for 1.15 million to 1.19 million. Housing starts were strong but permits flat in what was a mixed report for the nation’s housing sector.
Jared Wiesel, a partner from Revenue Analytics, a consulting firm, said although Home Depot’s results weren’t all that strong vs. estimates, the raw numbers pointed to continued growth.
“It was a good quarter from a pure performance standpoint vs. Wall Street expectations,” he said. He later added: “To get 5% comparable store sales is pretty strong. And there are a number of economic indicators helping them. Housing is a tailwind. And low gas prices free up discretionary income for consumers.”
IBD’S TAKE: Home Depot’s stock boasts an 82 IBD Composite Rating, meaning it’s outperformed 82% of all stocks on key metrics such as sales and profit growth in recent quarters. To see even higher rated stocks in the Retail/Wholesale Building Products Group, see the IBD Stock Checkup.
Home Depot shares were up and down on the stock market today. Shares fell 0.6% to 136.23, turned back from a 137.92 buy point from a 2-month consolidation. Home Depot rose as high as 138.65 intraday.
Archrival Lowe’s (LOW) is set to report second-quarter results early Wednesday. Consensus is for earnings to rise 18% to $1.42 a share on a 6.3% increase in revenue to $18.45 billion. The operator of Lowe’s and Orchard Supply Hardware stores had beaten estimates twice and met once in the prior three quarters. Shares fell 0.1% to 81.48, still above a recent 80.86 buy point.