The world's largest home improvement retailer,
The Home Depot Inc.
) reported better-than-expected results for the second quarter of
fiscal 2013. The company's earnings of $1.24 per share exceeded
the Zacks Consensus Estimate of $1.19, primarily due to the
recovery of the housing market in the U.S. Moreover, the
company's quarterly earnings surged 22.8% from the comparable
prior-year period earnings of $1.01 a share.
Net sales of this Zacks Rank #2 (Buy) company increased 9.5%
to $22,522 million compared with $20,570 million in the year-ago
quarter, primarily driven by increased comparable store sales,
strong sales of seasonal items and improved housing market.
However, Home Depot's top line was negatively impacted due to the
calendar timing shift caused by the additional 14th week in the
fourth quarter of fiscal 2012 resulting in one less week of
spring sales in the reported quarter.
Sales, at the company's comparable stores, improved 10.7%,
while comparable store sales in the U.S. stores grew 11.4%.
Moreover, net sales surpassed the Zacks Consensus Estimate of
Gross profit increased 9.9% to $7,721 million from $7,026
million reported in the comparable year-ago quarter. Gross profit
margin expanded 13 basis points (bps) to 34.28% compared with
34.16% in the second quarter of fiscal 2012.
Operating profit during the quarter jumped 17.5% to $3,018
million against $2,569 million in the year-ago comparable
quarter. Operating margin expanded 91 bps to 13.40% compared with
12.49% in the year-ago quarter. The improvement in operating
margin was driven by improved gross margin and effective cost
Balance Sheet and Cash Flow
Home Depot, which competes with
Lowe's Companies Inc.
), ended the second quarter with cash and cash equivalents of
$3,419 million, long-term debt (excluding current maturities) of
$11,450 million and shareholders' equity of $15,478 million.
During the first half of fiscal 2013, the company generated
$4,718 million of cash from operations and deployed $4,346
million toward share buyback, $1,143 million for dividend payment
and $599 million for capital expenditures.
Fiscal 2013 Outlook Raised
Bolstered by better-than-expected quarterly results, Home
Depot raised its sales forecast for fiscal 2013, projecting sales
growth of about 4.5%, with comparable store sales gain of 6%.
Earlier, the company had anticipated sales to increase 2.8% year
over year, while comparable store sales were expected to increase
Moreover, the company now anticipates fiscal 2013 earnings per
share to grow by approximately 20% to $3.60, compared with the
previous forecast of nearly 17% growth to $3.52. Furthermore,
Home Depot is committed towards enhancing shareholder's value
through share repurchases and dividend payments. The company
intends to repurchase an additional $2.2 billion of its common
stocks in the remaining period of fiscal 2013.
Other Stocks to Consider
Other stocks worth considering in the home improvement retail
Lumber Liquidators Holdings Inc.
), which has a Zacks Rank #1 (Strong Buy), and
Builders FirstSource Inc.
) that carries a Zacks Rank #2 (Buy).
BUILDERS FIRSTS (BLDR): Free Stock Analysis
HOME DEPOT (HD): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
LOWES COS (LOW): Free Stock Analysis Report
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