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Home Depot on Tuesday reported fiscal first-quarter earnings that beat analysts’ expectations, as shoppers spent more in its stores despite a damp start to the spring in much of the U.S.
Home Depot shares were down 1% in morning trading.
Here’s how the company did, compared with what Wall Street expected, according to Refinitiv consensus estimates:
- Earnings per share: $2.27, vs. $2.18 expected
- Revenue: $26.381 billion, vs. $26.378 expected
Sales at stores open at least 12 months rose 2.5% on a global basis and were up 3% in the U.S. This was shy of the 4.2% estimate from Refinitiv, but it wasn’t immediately clear if the numbers were comparable due to an extra week in the year-ago quarter.
In the quarter ended May 5, net income rose to $2.5 billion, or $2.27 a share, from $2.4 billion, or $2.08 a diluted share, a year earlier. Analysts were predicting the company would earn $2.18 a share.
Revenue climbed 5.7% to $26.381 billion, slightly above Refinitiv’s consensus estimate of $26.378 billion.
“We were pleased with the underlying performance of the core business despite unfavorable weather in February and significant deflation in lumber prices compared to a year ago,” CEO Craig Menear said in a statement.
“While the economy generally played ball, the weather did not and a very wet start to the year across many parts of the country meant that spending on items for outdoor projects was down considerably,” said Neil Saunders, managing director at GlobalData Retail. “However, as we have seen before, much of this spend is merely delayed and tends to get pushed into other periods. In any case, we believe that Home Depot managed to navigate this slip in demand far better than rivals, including Lowe’s. “
Oppenheimer’s Brian Nagel told CNBC’s “Squawk Box ” that improving weather is a good sign for the stock.
“As weather is turning more spring-like … sales in this category are picking up. With Home Depot, that’s going to imply a pretty strong second quarter,” he said.
Home Depot said customer transactions were up 3.8% during the quarter, while the average shopper’s ticket increased 2%, and sales per square foot were up 5.6%.
The company reaffirmed its guidance for fiscal 2019, which estimates earnings will rise 3.1% to $10.03 per share. Same-store sales are expected to grow 5%, while revenue increases 3.3%.
As of Monday’s market close, Home Depot market value was $210.6 billion, with shares up more than 11% this year and but less than 1% over the past 12 months. Lowe’s, which is set to report earnings before the bell Wednesday, is up 18% since January and 24% over the past 12 months. It has a market cap of $86.9 billion.
Correction: Last quarter, Home Depot’s forecast was viewed as disappointing. An earlier story incorrectly said the company cut its forecast. In addition, it is unclear how Home Depot same-store sales compare with estimates, since the company reported its results on a 52-week basis. Last year, its fiscal first quarter had 53 weeks. An earlier headline said same-store sales fell short.