Home Depot raises forecast, easing concern on home improvement market

Nov 13, 2018

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Home Depot Inc. (HD.N) eased doubts about a slowing home-improvement market, raising its annual sales forecast as quarterly earnings and revenue beat analysts’ estimates.

Same-store sales rose 4.8 per cent in the third quarter, surpassing analysts’ projections. Revenue of $26.3 billion topped estimates.

Key Insights

-Even with some housing indicators softening, home prices have continued to rise, which Home Depot sees as the biggest incentive for people to spend on their properties.

-The world’s largest home-improvement chain showed off its ability to manage an income statement as earnings of us$2.51 a share topped estimates for the 18th straight quarter, dating back to the beginning of 2014.

-The company signaled optimism for the rest of the year by raising its full-year sales growth forecast to 7.2 per cent, up from its previous outlook for a 7 per cent increase. Home Depot saw gross margin rise to 34.8 per cent -- the highest point in more than four years. It was still lower than analysts’ forecast of 35 per cent, however, with higher transportation and raw-material costs likely eating into profitability.

Market Reaction

Home Depot rose as much as 3.7 per cent to us$186.12 Tuesday before U.S. markets opened.