Wednesday, February 5, 2014

Home Depot performance Analysis & Stock price

The performance of home depot is directly related to the housing industry as the number of new housing permits and customer affordability has impacted positively to the housing industry. To gauge the housing activity the key matrices that are used are mortgage rates, housing market index, housing starts as well as new and existing home sales as the stats shows existing home sales rose by 9% during first eight month of CY13 while new home sales fell by 8% over the same period and this indicates that the growth of the Home Depot is also dependent upon sales of existing home compared with the new ones. The other driver of stock prices is the seasonal impact as the stats shows that it recorded highest sales in the second quarter of its fiscal year due to higher construction activity in the summer season. Also as the number of transaction increases it impacted the store sales and ultimately reflects into the stock prices of Home Depot.

Home Depot was successed to beat estimates for the third quarter of FY13. The company also raise guidance on the basis of better operating performance and share buyback activity. Good news HD is up nearly 2% today after beating analysts’ estimates and raising guidance. However, the company facing the risk of a housing slowdown and will not be able to sustain high single digit growth in same store sales as mortgage rates rise.

Home Depot’s 6 month results for 3QFY13 beat analysts’ estimates for revenues and adjusted EPS by 1.5% and 5.8% respectively. The company announced an EPS of $0.95 for the quarter vs. estimates of $0.89. Growth in company’s comparable store sales (comps) and share repurchases both contributed towards driving up the company’s EPS. Its comps were up 7.4% with a major contribution from 8.2% growth in comps from US stores. The company repurchased $1.69bn worth of stock (1.5% of the company’s total market cap) during the quarter. The company’s management cited improvement in the housing market along with better operational performance to be the core growth drivers. If analysts are right about The Home Depot (HD), the world’s largest home improvement retailer should post a profit of 89 cents per share on Monday, up from the year-ago figure of 74 cents. That Home Depot earnings result is expected to come on the heels of revenue of $19.17 billion, up from the year-ago figure of $18.13 billion. Then again, fans and investors of Home Depot stock can afford to be a little more confident with this particular hardware store than they likely can with other stocksHome Depot earnings have topped estimates in 13 of the past 14 quarters. All of those quarters have showed revenue growth, and all of them showed income growth. For perspective on just how reliable and impressive HD stock is for its owners, per share income for the company has grown every year, from 2009’s $1.57 to what will likely be a total of $3.70 this fiscal year. Revenue for Home Depot has grown from $66.17 billion in 2009 to what likely will be $77.68 billion for this year. Yes, the Home Depot earnings growth trend is as ridiculously strong as the sales growth trend is, and yes, the company maintaining that strong trend into 2014. For next year, the Home Depot earnings figure should roll in at $4.37 per share, on the heels of $82.43 billion in revenue.

















No comments:

Post a Comment