The world's largest home improvement retailer,
The Home Depot Inc.
) ushered fiscal 2013 on a positive note, reporting
stronger-than-expected earnings in the first quarter. The
company's earnings of 83 cents per share handily exceeded the
Zacks Consensus Estimate of 78 cents, primarily due to the
recovery of the housing market. Moreover, the company's quarterly
earnings surged 22.1% from the comparable prior-year period
earnings of 68 cents a share.
Net sales of this Zacks Rank #2 (Buy) company increased 7.4% to
$19,124 million compared with $17,808 million in the year-ago
quarter, primarily due to the seasonal timing shift caused by the
additional 14th week in the fourth quarter of fiscal 2012. Sales,
at the company's comparable stores, improved 4.3%, while
comparable store sales in the U.S. stores grew 4.8%. Moreover,
net sales surpassed the Zacks Consensus Estimate of $18,587
Gross profit increased 8.0% to $6,679 million from $6,183 million
reported in the comparable year-ago quarter. Gross profit margin
expanded 20 basis points (bps) to 34.9% compared with 34.7% in
the first quarter of fiscal 2012.
Operating profit during the quarter jumped 22.2% to $2,094
million against $1,714 million in the year-ago comparable
quarter. Operating margin expanded 130 bps to 10.9% compared with
9.6% in the year-ago quarter. The improvement in operating margin
was driven by robust sales performance and effective cost
Balance Sheet and Cash Flow
Home Depot, which competes with
Lowe's Companies Inc.
), ended the first quarter with cash and cash equivalents of
$4,337 million, long-term debt of $11,460 million and
shareholders' equity of $16,393 million. During the quarter, the
company generated $2,697 million of cash from operations and
deployed $2,196 million toward share buyback, $577 million for
dividend payment and $278 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 2.8%, with comparable store sales gain of 4%.
Earlier, the company had anticipated sales to increase by 2% year
over year, while comparable store sales were expected to increase
Moreover, the company now anticipates fiscal 2013 earnings per
share to grow by 17% to $3.52, compared with the previous
forecast of nearly 12% growth to $3.37.
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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