Home Depot (HD) 1st Quarter Earnings: What to Expect

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Home Depot (HD) is set to report first quarter fiscal 2019 earnings results before the opening bell Tuesday. The world’s largest home improvement retailer has a lot to prove.

Home Depot stock, which got punished following its fourth-quarter results in February, is up 12% year to date, but up just 3% in the trailing twelve months. The company’s exposure to housing has been a drag on the stock of late. Nevertheless, the retail giant is expected to have a stellar year. Despite the tough comparisons of 2018, analysts project 2019 to be not only a good year for home remodeling projects, but also repairs.

What’s more, the company has a strong track record for beating consensus estimates, while profits have topped analysts’ forecast during every quarter over the past five years. While it’s true, home-price growth has slowed for the last several months, while the number of existing home sales has also moderated, Home Depot should benefit from the from increased spending from Millennials as well as from the investments it has made in technology and fulfillment, which are expected to boost strong same-store sales growth and catalyze positive guidance.

These are just a few of the items investors will focus on when the results are released Tuesday. In the three months that ended March, the Atlanta, GA.-based company is expected to earn $2.19 per share on revenue of $26.39 billion. This compares to the year-ago quarter when earnings came to $2.08 per share on revenue of $24.95 billion. For the full year, ending in December, earnings of $10.09 per share would rise 2% year over year, while full-year revenue of the $111.52 billion would rise 2% year over year.

Analysts have grown concerned about Home Depot’s market share following its underwhelming Q4 results, which was followed by an upbeat quarter from rival Lowe’s (LOW). In the last quarter, Home Depot posted adjusted EPS of $2.25, beating analysts’ estimate of $2.16. Fourth quarter revenue, meanwhile, fell short of analysts’ expectations. As did SSSG (same-store sales growth). The weak revenue performance was blamed unfavorable weather conditions. But it wasn’t all bad news.

Despite downbeat fourth quarter performance, the company touted various initiatives to enhance the interconnected customer experience. Management continues to invest in various technological advancements to enhance the customer experience. The company is working on improving its delivery and fulfillment options as well as expanding its product offerings with the aim of improving customer satisfaction to drive SSSG.

Elsewhere, the company is spending to grow in the realm of e-commerce, where it aims to increase both its two-day and one-day shipping initiatives. To what extent have these initiatives, which require increased investments, impacted the bottom line? Have they done enough to boost the top line? These are he two main questions investors will want answered on Tuesday. But with Home Depot stock trading at a discount of 11% to its 52-week high of $215.43, now would be a good time to bet on rebound.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Earnings , Investing Ideas , Stocks , US Markets
Referenced Symbols: HD

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