This story originally appeared on Zacks
A month has passed since the last Home Depot (HD) revenue report. Stocks rose about 3.3% during that time, outperforming the S&P 500.
Will the recent positive trend continue until its next results release, or is Home Depot likely to experience a pullback? Before we dive into how investors and analysts have reacted in recent times, let’s take a quick look at his latest earnings report to better understand the important factors.
Home Depot Leads Third Quarter Profits and Sales on Strong Demand
Home Depot has released its fiscal 2021 third quarter results, in which both earnings and sales exceeded Zacks’ consensus estimate and improved year over year. The company has benefited from continued strong demand for home improvement projects, strong housing market trends and ongoing investments.
Home Depot’s earnings of $ 3.92 per share improved 23.3% from $ 3.18 recorded in the last year’s quarter. The result beat Zacks’ consensus estimate of $ 3.41.
Net sales rose 9.8% to $ 36,820 million from $ 33,536 million in the last year quarter and topped Zacks’ consensus estimate of $ 34,972.8 million. Sales benefited from continued strong demand for home improvement projects. The company adapts effectively to the high demand environment, through investments in its business and the dedication of its associates to serving customers.
Its overall lineup increased 6.1%, with a 5.5% improvement in the United States. In the reported quarter, comps were helped by a 12.9% increase in the average ticket, driven by high value buys from home builders. This was partially offset by a 5.5% drop in customer transactions, as demand for DIY projects remained lower than in the quarter of last year due to the high demand environment for renovation projects. residential last year. Sales per square foot increased 6.2% in the current quarter.
In dollar terms, gross profit rose 9.7% to $ 12,563 million from $ 11,456 million in the last year quarter, mainly on robust sales growth. This was partially offset by higher cost of goods sold. Meanwhile, the gross profit margin contracted 10 basis points (bps) to 34.1% from 34.2% in the previous year quarter.
Operating profit increased 19.4% to $ 5,795 million, while operating margin increased 120 basis points to 15.7%. The operating margin benefited from the growth in sales, offset by the contraction of the gross margin as well as by the increase in selling, general and other operating expenses.
Balance sheet and cash flow
Home Depot closed the third quarter of fiscal 2021 with cash and cash equivalents of $ 5,067 million, long-term debt (excluding current maturities) of $ 36,712 million and shareholders’ equity of 1,035. millions of dollars. In the first nine months of fiscal 2021, the company generated $ 13,386 million in net operating cash.
In the first nine months of fiscal 2021, it paid $ 5,264 million in cash dividends and repurchased shares worth $ 10,374 million.
How have the estimates evolved since?
It turns out that revised estimates have trended upward over the past month. The consensus estimate has changed by 10.39% due to these changes.
Right now, Home Depot has a growth score below D, a rating with the same score on the momentum front. Tracing a somewhat similar path, the stock received an F rating on the value side, placing it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an overall VGM score of F. If you’re not strategy-focused, this score is the one you should be interested in.
Estimates have trended higher for the stock, and the magnitude of these revisions looks promising. It’s no surprise that Home Depot has a Zacks Rank # 2 (Buy). We expect an above-average return on the security over the next few months.
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The Home Depot, Inc. (HD): Free Stock Analysis Report
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