Strong U.S. Housing Market Help Home Depot to Record Earnings

NEW YORK, NY / ACCESSWIRE / August 19, 2016 / A strong U.S. housing market helped Home Depot Inc. report record earnings for the second quarter of 2016. The retailer has also raised its expectations for the full year 2016. On Thursday, Home Depot’s shares declined 0.99 percent to close at $134.80 a share. The stock traded between $134.44 and $136.15 on volume of 4.43 million shares traded. The stock appears to be facing some resistance at $136.06 and $136.78 with some support at $134.07 and $133.47. Register with us now for your free membership and gain access to our Retail stock reports at: www.rdinvesting.com/subscribe-today/.

Let’s take a closer look at Home Depot’s earnings

The retailer reported a net income of $2.44 billion, or $1.97 per share, for the second quarter of fiscal 2016, an increase of 9.0 percent when compared to $2.23-billion, or $1.73 per share, a year ago. The company reported sales were $26.5 billion for the second quarter of fiscal 2016, a 6.6 percent increase when compared to sales of $24.83-billion a year ago. Average analysts’ expectations had called for a net income of $1.97 per share on revenue of $26.49-billion, according to Thomson Reuters I/B/E/S. Comparable store sales, stores open more than a year, increased 4.7 percent for the second quarter of fiscal 2016, while comparable sales for U.S. stores were up 5.4 percent.

The retailer has also experienced success with its online efforts. Online sales in the second quarter increased 19 percent year-over-year, totaling approximately 5.6 percent of total sales. Over 50 percent of Home Depot’s online traffic was attributed to mobile and tablets in the most recent quarter. Another encouraging statistic is roughly 42 percent of online purchases are picked up in-store, while roughly 90 percent of returns are completed in-store, providing a boost in store traffic.

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One of the most encouraging numbers is the rise in big-ticket items. Home Depot reported the number transactions over $900 increase 8.1 percent year-over-year in the second quarter ended July 31, these sales accounted for approximately 20 percent of total sales in the U.S.

The Home Depot has raised its full-year earnings outlook to $6.31 per share, an increase of 15.6 percent year-over-year and above previous estimates of $6.27 per share.

Strength in the Housing Market

“We had a solid quarter, achieving the highest quarterly sales and net earnings results in company history as housing continues to be a tailwind for our business,” CEO Craig Menear said in a statement.

The U.S. housing market has continued to show signs of strength in 2016. Recently, the National Association of Home Builders (NAHB) reported homebuilder’s confidence was on the rise. The U.S. NAHB Housing Index rose to 60 in August from a revised reading of 58 in July.

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” Robert Dietz, NAHB chief economist, said in a release. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”

Home Depot Inc. (NYSE: HD) Get Your Up-To-Date Home Depot Research Report at www.rdinvesting.com/company/HD.

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