We expect the global dealer in consumer goods
Home Depot Inc.
) to beat expectations when it reports second-quarter 2014 results
before the market opens on Aug 19.
Why a Likely Positive Surprise?
Our proven model shows that Home Depot may beat earnings because it
has the right combination of two key components.
Positive Zacks ESP:
Home Depot currently has an
of +1.39%. This is because the Most Accurate estimate stands at
$1.46 per share, while the Zacks Consensus Estimate is pegged at
Zacks Rank #3 (Hold):
Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance
of beating earnings. The Sell-rated stocks (#4 and 5) should never
be considered going into an earnings announcement.
The combination of Home Depot's Zacks Rank #3 and Earnings ESP of
+1.39% makes us confident of a positive earnings beat.
What's Driving Better-than-Expected Earnings?
Being the world's largest home improvement retailer, we believe
that Home Depot remains well positioned to benefit from the
gradually recovering housing market and expect the company to
continue with its upbeat performance going forward.
Home Depot has been implementing several initiatives to drive
long-term growth. The company is trying to widen the range of its
premium products, as this category has witnessed strong momentum
over the last four quarters. This home improvement retailer is also
looking for opportunities to expand its store count and enhance its
Moreover, with the acquisition of window covering retailer
Blinds.com, Home Depot has strengthened its presence in the rapidly
growing online coverings market. We believe that these initiatives
will drive the company's top and bottom-line growth in the long
Additionally, we believe that the company is on track to achieve
its long-term dividend payout, share repurchase and return on
Home Depot has topped the Zacks Consensus Estimate in the trailing
four quarters with an average positive surprise of 4.1%. In the
last concluded quarter, the company beat the Zacks Consensus
Estimate of 98 cents by 2%.
Other Stocks to Consider
Home Depot is not the only firm looking up this earnings season.
The following companies are also likely to beat earnings in the
Abercrombie & Fitch Co. (
) has an Earnings ESP of +20.00% and a Zacks Rank #2 (Buy).
GameStop Corp. (
) has an Earnings ESP of +10.53% and a Zacks Rank #3.
Dollar Tree Inc. (
) has an Earnings ESP of +7.69% and a Zacks Rank #3.
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