Home Depot (HD) raised its full-year forecasts on Tuesday after posting a surprise profit for the first quarter, as the home improvement giant took a toll on inflation. Louie (Little) follows on Wednesday. Home Depot wiped out its gains while Lowe’s stock fell.
Spring is usually the strongest season for home improvement retailers.
Home Depot Profits
Home Depot’s earnings for the quarter ended May 1 rose 6% to $4.09 a share, topping FactSet’s estimate of a 5% decline. Revenue rose 3.8 percent to $38.91 billion, also ahead of expectations for a 2 percent decline. Same-store sales rose 2.2%, against expectations for a 3% decline, with US businesses up 1.7%.
The home improvement giant continues to benefit from brick-and-mortar sales while expanding e-commerce sales. It said more than half of online orders in the first quarter were fulfilled through a store. Additionally, professional sales growth outpaced “do-it-yourself” or consumer sales last quarter.
“The strong performance in the quarter is even more impressive as we were comparing to historical growth last year and had a slower start to this spring,” Home Depot’s new CEO Ted Decker said in an earnings statement early Tuesday.
Management said on the earnings call that it did not see shoppers hold back in the face of high prices, nor does it expect them to start, according to CNBC.
“While we don’t know how inflation may affect consumer behavior in the future, we are watching closely…and we continue to encourage the underlying strength we see in the business,” Decker said.
For fiscal year 2022, Home Depot has driven EPS growth in the mid-single digits with total sales coming in at about 3%. This improves pre-routing for low odd numbers EPS growth And sales growth is ‘slightly positive’. Wall Street saw Home Depot’s earnings rise 3.6% and revenue increase 1.8% in 2023.
Home Depot Stock
Home Depot shares fell 0.1% to 295.59 on stock market today, after rising to 310.94. Home Depot stock encountered resistance at the low of the 50-day moving average and is still well below the 200-day average.
The Relative force line For Home Depot stock is improving after slipping since December 2021.
Estimates: Wall Street expects Lowe’s earnings per share to rise a penny to $3.22 despite a 3% decline in revenue to $23.765 billion. Same-store sales are expected to decline 2.5% after rising 5% in the prior year quarter.
consequences: check back early wednesday.
prospectsAnalysts expect earnings per share for 2023 of $13.39 and revenue of $98.106 billion, after Lowe guided upwards in February.
Lowe’s share price turned 1.8% lower at 191.16 on Tuesday, after rising earlier in the session. Lowe’s stock also remains well below key support levels. floor and decoration (FND), which modestly beat earnings and sales opinions on May 6, gaining 2.3% on Tuesday.
The woes of inflation follow the epidemic boom
For Home Depot and Lowe’s, the pandemic boom in home renovations and spending has waned, while higher interest rates are weighing on the broader housing sector.
Companies are also facing shortages of materials and drivers which is driving up costs.
In 2020 and 2021, consumers were stuck at home or moving out of their home spending huge amounts of money on renovation projects.
After 2020 and 2021, this year is off to a strong start for Home Depot and Lowe’s. Store visits in January and February continued above pre-pandemic levels, according to Placer.ai data.
But visits for April are down 1.6% for Home Depot and 9.5% for Lowe versus April 2019. The data company says visits grew month by month in both March and April.
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