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Home Depot (HD) |
HenryTo
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 Posted: Tue May 16, 2006 7:59 am Post subject: Home Depot (HD) |
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HD falling as we speak, even as it beat earnings estimates - due mostly to revenues that were somewhat on the light side. On a trailing 12-month basis, COST has been the lone big retailer that have been overperforming:
http://finance.yahoo.com/q/bc?t=1y&s=COST&l=on&z=m&q=l&c=hd%2Cwmt%2Ctgt
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Home Depot Profit Up, but Shares Fall
Tuesday May 16, 9:46 am ET
By Harry R. Weber, AP Business Writer
Home Depot Reports 19 Percent Jump in 1Q Profit, but Shares Fall in Morning Trade
ATLANTA (AP) -- The Home Depot Inc., the nation's largest home-improvement store chain, reported a 19 percent jump in first-quarter profit on a double-digit increase in sales, though it saw weak demand for flooring and seasonal products.
The earnings, announced Tuesday by the Atlanta-based company before the market opened, beat Wall Street expectations. But Home Depot's shares fell $1.34, or 3.3 percent, to $39.16 in early trading on the New York Stock Exchange due to the retail sales disappointment.
Home Depot said it earned $1.48 billion, or 70 cents a share, for the three months ending April 30, compared with a profit of $1.25 billion, or 57 cents a share, for the same period a year ago.
Analysts surveyed by Thomson Financial were expecting earnings of 67 cents a share.
Revenue in the first quarter rose 13.1 percent to $21.46 billion, compared with $18.97 billion recorded in the same period a year ago. The recent quarter's figure was slightly below the $21.63 billion in revenue analysts expected.
In a conference call with analysts and investors, Bob Nardelli, Home Depot's chief executive, said he was disappointed with the company's overall retail sales in the quarter. He said there was weakness in sales of seasonal items and flooring, the latter being a historical driver of Home Depot's installation business.
Even so, the company reaffirmed its sales and earnings-per-share growth guidance for 2006 and beyond. It still expects 2006 sales will grow in the range of 14 percent to 17 percent and earnings per share will grow between 10 percent and 14 percent, said Chief Financial Officer Carol Tome.
The company acquired Hughes Supply -- a distributor of construction, repair and maintenance products -- in the first quarter, and that company's results are included in Home Depot's consolidated results for the final month of the quarter.
For comparability purposes, The Home Depot said it will no longer report sales at stores open at least a year, a key retail barometer also known as same-store sales, but will now report total sales growth for both of its segments as a percentage change over the prior period.
The company said it increased its average sales ticket in the first quarter by 4.3 percent to $60.75.
Home Depot operates 2,051 stores in the United States, Canada and Mexico.
Home Depot completed its $3.2 billion purchase of Hughes Supply Inc. in late March.
The deal, announced Jan. 10, called for Home Depot to pay $46.50 per outstanding share for Orlando, Fla.-based Hughes Supply and assume $325 million in debt.
The deal, Home Depot's largest acquisition ever, doubled the size of The Home Depot Supply division, which serves business customers, such as homebuilders, professional contractors, municipalities and maintenance professionals.
Hughes Supply has more than 500 locations in 40 states.
In part because of the acquisition, Home Depot said its Home Depot Supply division saw its sales jump to $2.13 billion in the first quarter, compared with $657 million in the year-ago period. It saw the segment's operating profit jump to $149 million in the quarter, compared with $28 million in the same period a year ago.
The Home Depot Inc.: http://www.homedepot.com |
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rffrydr
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| Posted: Tue May 15, 2012 4:34 pm Post subject: |
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We've crashed on this one all the way down to the 50dma! Buy American.
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HenryTo
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| Posted: Tue May 15, 2012 2:40 pm Post subject: |
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Morningstar on HD's 1Q earnings.
| Quote: | | Home Depot HD posted solid first-quarter sales and profit gains that were slightly ahead of our expectations and in line with consensus, as it benefited from the combination of extremely favorable weather and strength in its core business. Our investment thesis remains intact, and we continue to believe that Home Depot can gain share as the U.S. housing market slowly recovers in the coming years. We plan to make adjustments to our financial model following first-quarter results, but these changes will not be significant enough to affect our $49 fair value estimate. Our bias remains skewed to the upside, but we would require a wider margin of safety before recommending the shares. Total first-quarter revenue increased 5.9% to $17.8 billion, as U.S. comparable-store sales jumped 5.9%, aided by record warm weather and a rebound in some depressed markets. Gross margins were up nominally year over year as supply chain benefits offset some product mix shift pressure. The company continues to drive operational efficiency and, with the benefit of seasonal sales growth (which delivered outsize sales and margin), drove a 90-basis-point improvement in operating margins to 9.6%. The company reported a 28% year-over-year jump in adjusted diluted earnings per share to $0.65, modestly ahead of our forecast. Management tiptoed around questions related to the macro environment and hasn't adjusted its full-year outlook based on any further strengthening in the U.S. housing market. Some investors may have been disappointed by the firm's revenue growth in the quarter, given robust government-reported sales data, and management painted a frank (if not bland) portrait of the environment, which acknowledges that do-it-yourself projects are leading the pro consumer out of the recession (which was a surprise). We expect the firm to provide incremental detail on this point, as well as a longer-range market and financial outlook, at its investor conference in Atlanta next month. |
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HenryTo
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| Posted: Tue Feb 21, 2012 9:47 pm Post subject: |
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Morningstar on HD's 4Q earnings.
| Quote: | | Home Depot HD again posted solid quarterly results that came in ahead of our expectations, thanks to a surprisingly strong top line (U.S. comps were up 6.1%) and continued expense management. We still have a fundamentally positive view of the home-improvement retail market and believe it is still fairly early in the cyclical recovery. We plan to increase our fair value estimate to reflect the time value of money, the firm's overall outperformance in 2011, and management's encouraging 2012 outlook, which calls for low-single-digit comp growth and 50 basis points of margin expansion. Total fourth-quarter revenue grew to $16 billion, a 5.9% year-over-year increase, well ahead of management’s expectation for a low-single-digit gain. Consolidated same-store sales growth of 5.7% was aided by favorable (warmer) winter weather, but this shouldn't take away from the fact that the fourth quarter marked only the third time in three years that U.S. comp growth outpaced that of the overall company (which is primarily the faster-growing Mexico and Canadian businesses). Operating margins spiked to 8.3%, up 140 basis points year over year, reflecting the top-line gains as well as management's ongoing supply chain improvement initiatives. Bearing in mind that the fourth quarter is the seasonally lightest quarter for the company, this was an impressive number. Diluted earnings per share came in at $0.50, well ahead of management’s guidance and our own implied estimate. We view Home De pot as well positioned to benefit from a cyclical recovery in consumer spending and housing-related expenditures. We are not projecting more than mid-single-digit revenue growth for 2012 (which includes a 53rd week), but owing to the firm's improving operating characteristics, this should drive 50 basis points of operating leverage and, when combined with management's expectation of $3.5 billion in buybacks, at least 12% EPS growth (to $2.79). Our financial projections and fair value estimate would be conservative if the residential construction market were to spring back more quickly than we currently anticipate. Early signs point to an improving environment, which is encouraging, but even if a full-fledged economic recovery takes longer than expected to materialize, we still view Home Depot as a core portfolio holding. |
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rffrydr
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| Posted: Tue Jan 24, 2012 9:50 am Post subject: |
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We're about the same price and earnings/share as when this thread began-- near the exact height of the biggest housing bubble we will ever see in this market in our lifetimes. The "productivity" of firing labor; 50% payout ratio and huge non-diluted buyback support in an environment of fear go a long a way towards explaining that. Throw in some pro-cyclical seasonals. Nothing is obvious. 
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HenryTo
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| Posted: Mon Jan 23, 2012 5:24 pm Post subject: |
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Morningstar's latest update on HD.
| Quote: | | Home Depot HD announced Friday that it had acquired Redbeacon, an online home services business that matches customers and their home-improvement projects with contractors who are willing to competitively bid for the jobs. Though financial terms were not disclosed, we characterize the acquisition as bolt-on, since the revenue generated from the Redbeacon model is unlikely to move the needle for the country's largest home-improvement retailer. As such, our $42 fair value estimate is unchanged. Redbeacon's service, launched in 2009, will screen (check licenses, references, reviews, and prior job photos, for example) thousands of contractors, while offering customers a seemingly more reliable experience throughout a competitive bidding process. The company also offers a home service guarantee, adding yet another layer to customer confidence. In return for this service, the company takes a 10% commission from the winning bidder/contractor. We view this as an interesting move for Home Depot as the firm looks to drive incremental revenue and match up its two primary customers--contractors (those searching for work) and "do it for me" consumers (who need work to be done)--while encouraging both to spend more time and money with Home Depot. However, we note the strategic difference between Redbeacon and ATG Stores, which home-improvement competitor Lowe's LOW acquired earlier this month. Redbeacon is an outsourced service model--an exchange of sorts--while ATG Stores seeks to extend Lowe's "endless aisle" and increase online tr ansactions. Redbeacon's business model (a combination of the yellow pages and Angie's List, plus a screening and scheduling component) isn't entirely novel, as competitor ServiceMagic has been around since 1998. However, it's a potentially lucrative tuck-in acquisition for Home Depot. In our view, it has the power to keep Home Depot top of mind in social networking circles, adds to its improving reputation of providing solid customer service and home-improvement recommendations, and potentially drives incremental repeat business from its core professional customer, which accounts for more than 20% of the firm's sales. |
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HenryTo
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| Posted: Tue Nov 15, 2011 12:51 pm Post subject: |
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Morningstar on HD's 3Q earnings:
| Quote: | | Home Depot's HD third-quarter sales and profit gains were in line with our expectations and slightly ahead of consensus, as the firm executed well in a lackluster macro environment. Merchandising continues to be a point of strength, and benefits from the firm's updated supply chain have been widespread. We plan to adjust our financial model following these results, but the changes will not be significant enough to affect our $42 fair value estimate. Total third-quarter revenue increased 4.4% to $17.3 billion, as U.S. comparable-store sales ticked up 3.8%, aided partially by severe weather and a rebound in some depressed markets. While gross margins were essentially flat year over year, the firm leveraged expenses nicely, given a higher transaction count and average ticket in the quarter, and operating margins came in at 9.3% (a 60-basis-point increase). The company reported a 19% year-over-year jump in diluted earnings per share to $0.60, in line with our forecast. The conference call essentially took the place of an official analyst day, in our view, as management provided details on several long-term strategic initiatives. First, Home Depot announced a 16% increase in its quarterly dividend (to $0.29 per share) and increased its targeted payout ratio (to 50% from 40%), putting it near the top of all retailers in that category. Next, the company intends to repurchase $6.8 billion in shares by the end of fiscal 2014, slightly ahead of its prior plan. In a similar vein, the board clarified its capital-allocation principle and is now targeting a debt/EBITDA ratio of 2.0 times (down from a maximum of 2.5 previously). Finally, management reiterated its 15% return on invested capital target, but announced that it plans to achieve this goal by the end of fiscal 2013, essentially two years ahead of schedule. We continue to believe that investors will be well served by owning Home Depot shares over the long term, and we view Tuesday's results and updated strategic targets as the latest example of the firm's progress in its multiyear transformation. In our view, the investments the firm made during the economic downturn across technology, merchandising, and its rapid deployment centers will drive further incremental margin gains as the U.S. housing market and general economy recover over the next few years. Our 10-year financial model continues to assume low-double-digit operating margins at the end of our explicit forecast period. In the meantime, Home Depot continues to generate significant cash flow and return value to shareholders. Although shares currently trade at roughly a 10% discount to our $42 fair value estimate and offer a 3% dividend yield, they are no longer inexpensive (at 17.6 and 16 times our fiscal 2012 and 2013 earnings estimates, respectively). We still like this wide-moat name but would require a wider margin of safety or visibility into a residential housing rebound before establishing a position at today's levels. |
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HenryTo
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| Posted: Tue May 17, 2011 10:53 pm Post subject: |
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Morningstar on HD's 1Q earnings:
| Quote: | | Home Depot HD reported first-quarter results that, like Lowe's LOW on Monday, reflected solid expense management amid a tough seasonal period. The company posted earnings of $0.50 per share, in line with our expectations and consensus, despite a weaker-than-expected top line. Comparable U.S. sales dipped 0.7% year over year as strength in "center of the store" purchases like tools, electrical, and plumbing were offset by a drop in garden/seasonal and big-ticket discretionary items (as the firm lapped tough comps in appliances and government stimulus, specifically). We plan to make minor updates to our 2011 sales, operating margin, and earnings expectations to reflect first-quarter results and management's updated full-year outlook, but we expect no change to our fair value estimate. Total revenue was flat year over year at $16.8 billion and slightly below our expectations, as a 2% drop in transactions was nearly offset by a modest increase in average ticket. Same-store sales were positive in February and March, and while cold weather in the North drove a 4% drop in April U.S. comp store sales, management was quick to point out that sales trends have rebounded nicely in May. Gross margins were up 20 basis points year over year to 34.4%, aided by product mix and supply-chain gains, and operating margins jumped 80 basis points year over year to 8.5%, reflecting management's near-term expense controls and benefits from the company's ongoing supply-chain restructuring initiatives. The company repurchased $1.3 billion worth of shares in the quarter (which added $0.02 to earnings per share) and is on pace to meet our internal expectation for a total of $2.4 billion in buybacks this year. Management stuck to its 2011 top-line growth target of 2.5%, despite the softer first quarter, and is still using U.S. GDP growth as a general guide. We are comfortable with this range, and while the pace of spending is likely to tick up in the second quarter and beyond, owing to a subtle shift in timing of advertising, we still view management's increased EPS guidance (to $2.24 from $2.20) as achievable. The company is well positioned in home improvement retail thanks to a wide economic moat based on meaningful economies of scale, and we continue to view it as a primary beneficiary as the economic environment improves over the next few years. |
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HenryTo
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| Posted: Tue Aug 17, 2010 11:32 am Post subject: |
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Morningstar on HD's 2Q earnings:
| Quote: | | Home Depot HD reported second-quarter results that, like Lowe's LOW the day before, reflect solid expense management amid a challenging macro environment. The company posted earnings of $0.72 per share, slightly above our estimate and consensus, despite a weaker-than-expected top line. Comparable U.S. sales rose 1.0% year over year as strength in smaller-ticket purchases like electrical and plumbing were offset by a drop in garden/seasonal and big-ticket discretionary items such as appliances and building materials. The pro customer (3% of volume, 30% of sales) is recovering more slowly than we and management had anticipated, and while this is not yet a cause for concern as it relates to the company's long-term revenue growth trajectory, it is something we're keeping our eye on. We plan to make minor updates to our 2010 sales, operating margin, and earnings expectations to reflect second-quarter results and management's updated full-year outlook, but expect no change to our fair value estimate. Total second-quarter revenue grew to $19.4 billion, a 1.8% year-over-year increase, but below our expectation for 3% growth. Domestic same-store sales growth of 1.0% slowed from 3.3% in first quarter, yet remained in positive territory, supporting our view that the firm is well positioned for a long and relatively choppy economic recovery. The gross margin was up 40 basis points year over year, to 33.9%, driven by a 2% bump in transactions, while the average ticket was essentially flat. The operating margin jumped 100 basis points year over year to 10.9%, reflecting management's near-term expense controls and benefits from the ongoing supply-chain restructuring initia tives. The company repurchased $700 million worth of shares in the quarter, bringing the year-to-date number to more than $1.2 billion (40% of management's $3 billion full-year buyback target). |
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HenryTo
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| Posted: Wed May 19, 2010 11:32 pm Post subject: |
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Morningstar's notes on HD's 1Q earnings. Morningstar also thinks that the home improvement market is in the beginning stages of a multi-year recovery:
| Quote: | | Home Depot HD reported strong first-quarter revenue and profit growth that exceeded our expectations, fueled by solid performance across seasonal categories and smaller-ticket transactions. Total revenue rose 4.3% year over year to $16.9 billion, and U.S. same-store sales turned positive (up 3.3%) for the first time since the fourth quarter of 2005. The gross margin expanded 70 basis points year over year to 34.4%, and the operating margin improved to 7.7% from 6.1% a year ago, reflecting strong volume and supply-chain gains. We plan to modestly increase our full-year revenue growth and profitability assumptions for 2010, but the changes will not be material enough to alter our fair value estimate. Management now expects 3.5% revenue growth (up from its previous f orecast of 2.5%) and earnings per share of $1.88 (up from $1.79) for 2010. The increased outlook reflects the combination of a solid start to the year and cautious optimism regarding the macroeconomic environment as management (similar to Lowe's LOW) called for 2010 to be a transition year. It was a solid quarter for Home Depot on many fronts, and we believe the home-improvement retail industry is still in the early stages of a multiyear recovery. |
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HenryTo
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| Posted: Tue Feb 23, 2010 3:58 pm Post subject: |
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Morningstar's analyst notes on HD:
| Quote: | | Home Depot's HD solid fourth-quarter results affirm our view that the home-improvement market is poised for a recovery. Improving sales trends coupled with efficiencies gained from the company's effort to revamp its distribution network should result in further operating margin expansion in 2010. We are maintaining our fair value estimate. Total sales were $14.6 billion, a 0.3% decline from the prior-year period. While total comparable sales grew 1.2%, domestic same-store sales were down 1.1%, as U.S. consumers remain cautious with their discretionary dollars. Transactions for goods $50 and below were up 3.5% from the prior-y ear period, while transactions on items priced $900 and above were lagging. We anticipate improved spending on bigger-ticket items and project low-single-digit sales growth for 2010 amid a more stable economy. Well-managed inventories coupled with cost-containment efforts and improved efficiencies from the company's supply-chain initiative resulted in a 320-basis-point improvement in the operating margin to 5% in the fourth quarter. There should be additional margin expansion this year, as the company's improved distribution network continues to bear fruit. We were also encouraged by Home Depot's decision to increase the dividend 5%, a move that hasn't been made since 2006. |
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HenryTo
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| Posted: Wed Aug 19, 2009 7:00 am Post subject: |
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Morningstar's analyst notes on HD's 2Q 2009 earnings:
| Quote: | | Home Depot's HD second-quarter results reflect the pressures of lackluster consumer spending and the weak domestic housing market. Still, solid expense control and market share gains in the quarter helped confirm our thesis that this retailer's competitive position remains strong. We are optimistic about Home Depot's long-term growth prospects and believe the firm is well positioned to emerge from this cyclical downturn as a dominant force in the home-improvement market. We are maintaining our fair value estimate, as results through the first six months of the year are tracking in line with our full-year projections. Total qu arterly sales decreased 9.1% year over year, to $19.1 billion, reflecting an 8.5% decrease in same-store sales. We believe same-store sales were hurt by unseasonable weather in certain markets, as well as fiscal stimulus-aided results in the year-ago quarter. Despite weak same-store sales, we're pleased that Home Depot was able to slightly increase its U.S. gross margin, representing the seventh consecutive quarter of improvement. We think this was the result of better merchandising and solid inventory management, with inventories down 9% year over year. However, because cost-cutting initiatives didn't keep pace with the sales decline, the operating margin fell to 9.6% from 9.7% in the year-ago period. We're encouraged that Home Depot gained market share in 6 of 13 merchandise categories. We estimate that gains in these categories led to a slight increase in total market share. These gains probably came at the expense of regional and independent home-improvement and hardware chains. We believe these less capitalized businesses will continue to struggle and close stores as a result of the slowdown in consumer spending. While we see some encouraging macroeconomic trends--single-family housing starts have increased and existing home inventories are being absorbed in many markets--many of these variables remain near historical lows. Consequently, we expect sales in the home-improvement industry will continue to be soft during the next few quarters. |
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HenryTo
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| Posted: Wed May 20, 2009 2:00 am Post subject: |
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Morningstar's notes on HD's 1Q earnings:
| Quote: | | Home Depot HD reported first-quarter results that were slightly better than our estimates, yet still reflect the very challenging consumer spending environment and its effect on many retailers. In the first quarter, total sales decreased 9.7% year over year, to $16.2 billion, driven by a 10.2% decrease in same-store sales. On Monday, rival Lowe's LOW reported a 6.6% decline in same-store sales. Home Depot reported net earnings of $514 million, compared with net earnings of $356 million in the year-ago period. Excluding one-time gains and charges rela ted to the company's store-rationalization plan, including the closure of the Expo business, Home Depot's net earnings totaled $587 million, down from $697 million in the year-ago period. While our long-term outlook is unchanged, we believe the business faces a number of challenges over the next several quarters. We remain concerned that Home Depot's operations will be pressured by a weak housing market, rising unemployment, and tight credit conditions. We plan to re-evaluate our model assumptions after taking a closer look at the numbers and listening to management's comments on the conference call. For now, we don't anticipate a material change to our fair value estimate. |
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HenryTo
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| Posted: Wed Feb 25, 2009 12:04 am Post subject: |
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Morningstar's preliminary take on HD's earnings:
| Quote: | Home Depot HD reported fourth-quarter results that were in line with our estimates and reflect the very challenging consumer spending environment and its effect on many retailers in the period. In the fourth quarter, total sales decreased 17.3% year over year, to $14.6 billion, driven by a 13.0% decrease in same-store sales. In addition, the fourth quarter of 2008 consisted of 13 weeks compared with 14 weeks in the fourth quarter of 2007. Home Depot reported a net loss of $54 million, compared with net earnings of $671 million in the year-ago period. As expected, the 2008 results reflect a $387 million charge related to the company's closure of its Expo, THD Design Center, Yardbirds, and HD Bath businesses. The 2008 results also reflect a pretax write-down of the company's investment in HD Supply of $163 million as well as a loss from discontinued operations of $52 million, net of tax. While our long-term outlook is unchanged, we believe the business faces a number of challenges over the next several quarters. We remain concerned that Home Depot's operations will be pressured by a weak housing market, rising unemployment, and tight credit conditions. We plan to re-evaluate our model assumptions after taking a closer look at the numbers and listening to management's comments on the conference call. For now, we don't anticipate a material change to our fair value estimate.
Brady Lemos |
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HenryTo
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HenryTo
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