Home Depot shares jumped in early Tuesday trading after the home-improvement retailer posted better-than-expected third quarter earnings and lifted its full-year profit forecast, thanks in part to a boost in spending tied to extreme weather in the Southeast.
Home Depot (HD) earnings for the three months ended in October were $3.78 a share, down 1.8% from the same period last year but 13 cents ahead of the Wall Street consensus forecast. Revenues rose 6.6% from last year to $40.22 billion, again topping analysts' estimates of a $39.32 billion tally.
Same-store sales were down 1.3% from a year earlier, just above Wall Street forecasts of a 3.25% decline, while comparable sales in the U.S. were down 1.2%. Average purchases slipped 0.8% per trip to $88.65, while the number of individual transactions slowed by around 0.2%.
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Looking into the 2024 fiscal year, which ends in January, Home Depot said earnings would likely decline by around 2% from the year-earlier $15.11-a-share tally. Comparable sales are seen down 2.5%, compared with its prior forecast of a decline of between 3% and 4%.
"While macroeconomic uncertainty remains, our third-quarter performance exceeded our expectations," said CEO Ted Decker. "As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand."
BofA: Spending in states affected by hurricanes Helene and Milton recovered toward the last week of October pic.twitter.com/lbQAJWMB74
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) November 12, 2024
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Home Depot shares, a Dow component, were marked 1% higher in premarket trading to indicate a Tuesday opening-bell price of $412.25 each, a move would extend the stock's six-month gain to around 23%.
"The stock has had a nice run into earnings, so it felt like the bar was already set quite high," said David Wagner, head of equity portfolio management at Aptus Capital Advisors.
"Results lived up to expectations, which were characterized by a healthy comp beat and a guidance raise," he added. "I'll be focusing on how much lift the earnings received from a hurricane beat to help gauge where the consumer sits in regards to the business cycle. This should give some clarity to if the company can match or beat their 2025 expectations."
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