Home Depot Boosts Outlook, Buybacks After Q2 Rebound

Retail

Published: August 19, 2014 7:05 am

Last Updated: April 27, 2020 11:02 pm

Home Depot Inc. (NYSE: HD) reported second-quarter 2014 results before markets opened Tuesday. The home improvement retailer posted diluted earnings per share (EPS) of $1.52 and $23.81 billion in revenues. In the same period a year ago, the company reported EPS of $1.23 on revenue of $22.52 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.45 and $23.61 billion in revenue.

Second-quarter same-store sales at all Home Depot locations rose 5.8% year over year and 6.4% in the United States.

The company once more reaffirmed 2014 guidance for sales growth of 4.8% and raised its EPS estimate from a range of $4.38 to $4.42 to a new level of $4.52. Home Depot also said it intends to repurchase $7 billion in common stock in 2014, an increase of $2 billion from the previous guidance. The company said it had bought back $3.5 billion in the first two quarters of the fiscal year.

Lowe’s Companies Inc. (NYSE: LOW) is set to report earnings Wednesday morning. The home improvement materials giant has Thomson Reuters consensus estimates of $1.02 EPS and $16.55 billion in revenues. Estimates for next quarter are $0.58 EPS and $13.58 billion in revenues. At $50.45 as of Monday’s close, it has a 52-week range is $43.52 to $52.08 and a consensus price target of $52.13. Lowe’s is valued at about 16 times next year’s expected earnings.

Home Depot’s CEO said:

In the second quarter, our spring seasonal business rebounded, and we saw strong performance in the core of the store and across all of our geographies.

After what was a so-so first quarter, Home Depot’s CEO should be able to crow a bit over second-quarter results. Total sales rose 5.7% year-over-year and EPS rose more than 22% in what has so far been a mixed quarter for retailers. The stock should be an investor favorite Tuesday and Lowe’s should get a lift as well.

Shares were up about 3.3% in premarket trading, at $86.35 in a 52-week range of $72.21 to $84.62. Thomson Reuters had a consensus analyst price target of around $90.30 before the results were announced.

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