The world's largest home improvement retailer,
The Home Depot Inc.
) adjusted earnings for the fourth quarter of fiscal 2012 came in
at 67 cents per share, surging 34.0% from the comparable
prior-year period earnings of 50 cents, primarily driven by
strong sales growth and improved operating performance. Moreover,
the company's quarterly earnings handily exceeded the Zacks
Consensus Estimate of 64 cents a share.
Net sales of this Zacks Rank #2 (Buy) company increased 13.9%
to $18.246 billion compared with $16.014 billion in the year-ago
quarter, primarily driven by increased number of customer
transactions and average ticket size. Sales, at the company's
comparable stores, improved 7%, while comparable store sales in
the U.S. stores grew 7.1%. Moreover, net sales surpassed the
Zacks Consensus Estimate of $17.693 billion.
Gross profit increased 13.7% to $6.366 billion from $5.597
billion reported in the comparable year-ago quarter. However,
gross profit margin contracted minutely by 6 basis points (bps)
to 34.89% compared with 34.95% in the fourth quarter of fiscal
Operating profit, during the reported quarter jumped 31.6% to
$1.750 billion against $1.330 billion in the year-ago comparable
quarter. Operating margin expanded 128 bps to 9.59% compared with
8.31% in the year-ago quarter. The improvement in operating
margin was primarily driven by effective cost management.
Balance Sheet and Cash Flow
Home Depot, which competes with
Lowe's Companies Inc.
), ended the fiscal 2012 with cash and cash equivalents of $2.494
billion, long-term debt of $9.475 billion and shareholders'
equity of $17.777 billion. During the fiscal, the company
generated $6.975 billion of cash from operations and deployed
$3.984 billion toward share buyback, $1.743 billion for dividend
payment and $1.312 billion for capital expenditures.
Dividend and New Share Repurchase Program
Subsequent to the fourth-quarter results, Home Depot's board
of directors has declared a quarterly cash dividend of 39 cents
per share, representing an increase of 34% from the last paid
dividend. The dividend, payable on Mar 28, 2013 to the
shareholders of record as of Mar 14, 2013, will mark the
consecutive quarterly dividend.
Apart from this, the company also authorized a new $17.0
billion share repurchase program, of which it expects to buyback
nearly $4.5 billion worth of common stock in fiscal 2013. Since
2002 through Feb 3, 2013, the company has repurchased
approximately 1.0 billion shares of its common stock by deploying
more than $37.5 billion.
Outlook for Fiscal 2013
Bolstered by better-than-expected quarterly results, Home
Depot expects its fiscal 2013 total sales to increase by 2% year
over year, while comparable store sales are expected to increase
nearly 3%. Gross margin is expected to expand marginally, whereas
operating margin is anticipated to increase 65 bps. Tax rate is
projected to be approximately 37%.
Based on the above forecasts, the company is expecting its
fiscal 2013 earnings per share to grow by nearly 12% to $3.37.
Moreover, Home Depot intends to open 9 new stores in the
Other Stocks to Consider
Other stocks worth considering in the home improvement retail
Lumber Liquidators Holdings, Inc.
Travis Perkins Inc.
). Both these stocks hold a Zacks Rank #1 (Strong Buy).
HOME DEPOT (HD): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
LOWES COS (LOW): Free Stock Analysis Report
TRAVIS PERKINS (TVPKF): Get Free Report
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