Last week's stronger-than-expected earnings results for the
fourth quarter of fiscal 2013, along with an impressive fiscal
2014 outlook and a raised quarterly dividend infused substantial
momentum into the shares of
Home Depot Inc.
), which have gained nearly 5.3% since reporting its financial
results. Moreover, shares of this Zacks Rank #3 (Hold) home
improvement retailer went on to hit a new 52-week high of $83.10
on Friday, Feb 28, 2014, before closing at $82.03.
HOME DEPOT (HD): Free Stock Analysis Report
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Average volume of shares traded over the last 3 months came in at
approximately 6,765K. Moreover, the stock's valuation provides
substantial upside potential as it currently trades at a forward
P/E of 18.6x, nearly 15.1% below the peer group average of 21.9x.
The company's adjusted earnings of 73 cents per share exceeded
the year-ago quarter's adjusted earnings of 67 cents as well as
the Zacks Consensus Estimate of 71 cents, primarily driven by
effective cost management and a lower share count.
After concluding a favorable fiscal 2013, Home Depot provided its
outlook for fiscal 2014 with sales and comps growth of
approximately 4.8% and 4.6%, respectively. The company expects
diluted earnings for the fiscal to grow 16.5% year over year to
$4.38 per share.
Additionally, the company also boasts of an impressive record of
beating the quarterly earnings expectations. With respect to
this, Home Depot has beaten the Zacks Consensus Estimate 23 times
in the last 24 quarters with an average surprise of 34.6%. In the
last-reported quarter, i.e. the fourth quarter of fiscal 2013,
the company's earnings beat the Zacks Consensus Estimate by 4.3%.
Home Depot has always maintained a disciplined capital allocation
strategy, focused on making investments to develop its business,
while using the excess cash to enhance shareholder returns via
paying dividends and share buybacks.
Along with its earnings release, Home Depot approved a 21% hike
in its quarterly dividend payout. The increased dividend of 47
cents per share, which is payable on Mar 27, marks the company's
108th consecutive quarterly dividend payment.
Since 1987, the company has increased its dividend from 0.06
cents to 47 cents. Additionally, the company targets to grow
return on invested capital to 24% by the close of 2015.
Home Depot is a leading player in the highly fragmented home
improvement industry. The company is revamping itself by
concentrating on square footage growth and maximization of
productivity from its existing store base.
In addition, the company has implemented significant changes to
its store operations to make them simpler and more
customer-friendly. We believe these initiatives will induce more
traffic to its stores and boost its top line.
Besides Home Depot, companies such as
Tiffany & Co.
The New York Times Company
) achieved new 52-week highs of $93.97, $16.47 and $38.06,