Home Depot (NYSE:
) reported another strong quarter Tuesday, topping second-quarter
analyst estimates. Net income increased 12 percent to $1.53
billion, or $1.01 a share from $1.36 billion, or $0.86 per share in
the year ago period. Analysts surveyed by Bloomberg projected
earnings per share of $0.97 on average.
"Based on its year-to-date performance, the company raised its
fiscal 2012 diluted earnings-per-share guidance and now expects
diluted earnings per share to be up approximately 19 percent to
$2.95 for the year," said Home Depot in a
. "This earnings-per-share guidance includes the benefit of the
Company's year-to-date share repurchases and the Company's intent
to repurchase $1.4 billion in additional shares over the remainder
of the year."
The Atlanta-based retailer reaffirmed that it expects full-year
sales to rise 4.6 percent year-over year according to the
The strong showing was largely credited to CEO Frank Blake's
ability to navigate Home Depot through a tough existing housing
market and a retrenched consumer. Blake has cut spending and
improved the customer experience.
Through the use of new handheld technology devices, employees
have been able to pinpoint inventory and expedite sales at the
register. Operating expenses declined 2.7 percent to $4.46 billion
and the average transaction value rose 1.8 percent, thanks in large
part to these initiatives.
On CNBC's Squawk on the Street segment, Jim Cramer said Home
Depot is one of the great American stories and the stock is
undervalued. Shares have been steadily climbing over the past 12
months, rising from around $30.47 to $52.82 as of Monday's close.
In early Tuesday trading, the stock was up 3.4 percent to $54.60, a
new 52-week high.
) initially traded higher by around 1.5 percent Tuesday in sympathy
with Home Depot, but later traded down slightly for the day. Lowe's
shares were hit hard amid the company's failure to acquire Canadian
home improvement and hardware retailer
in July. Following May highs, Lowe's shares dropped from around
$32.10 to $25.60.
Home Depot has reported five consecutive quarters of increased
same store sales, including a second-quarter increase of 2.1
percent. This second-quarter increase may have reaffirmed Home
Depot's commitment to improving customers' experience.
In the Tuesday earnings release, Blake said, "As expected,
second-quarter sales reflected the pull forward of seasonal
activity into the first quarter. But we saw continued demand for
core products and delivered second-quarter earnings above our
The prospects for the home improvement sector largely depend on
ongoing improvement in the new home sales market that has
propelled home builder shares
like Lennar (NYSE:
), The Ryland Group (NYSE:
), PulteGroup (NYSE:
) and D.R. Horton (NYSE: ) up between 25 percent and 60 percent
since June lows.
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