Home Depot Q2 Profit Meets View, Boosts Full Year Outlook

Taking cue from the solid performance in the first half of fiscal 2015 and the acquisition of Interline Brands Inc., Home Depot has raised its outlook for full fiscal year. Earlier in the month, the Department of Commerce reported that residential construction improved by 0.4% during the month of June. The wandering eye of shoppers increasingly falls on the home, cars and electronics, rather than shoes, skirts and shirts.

Home Depot has beat net sales and same-store sales expectations the past four quarters. Analysts projected a 3.5 percent gain, according to Consensus Metrix. “There’s a real opportunity for them to better penetrate that pro customer”. Merchandise inventory for the quarter increased 1.7% to $11.86 billion.

A healing real estate market has added fuel for Home Depot, whose shares appeared to be heading toward an all-time high before the opening bell Tuesday. The improved guidance has come from prior sales growth projection of 4.2% to 4.8%. Purchases of new homes are 21.2 per cent higher through the first six months of this year than the same period in 2014.

The home-improvement retailer posted revenue of $24.83 billion in the period, which also topped Street forecasts. On average, 27 analysts polled by Thomson Reuters expected earnings of $1.71 per share for the quarter.

“We saw balanced growth across our business resulting from strength in the core of the store as well as the continued recovery of the U.S. housing market”, President, Chairman and CEO Craig Menear said in a written statement.

Home Depot’s net income rose to $2.23-billion (U.S.), or $1.73 per share, in the quarter ended August 2 from $2.05-billion, or $1.52 per share, a year earlier. Excluding some items, profit was $1.71 a share, matching analysts’ estimates.

The company now expects sales to rise by 5.2% to 6% for fiscal year 2015.

Home Depot’s same-store sales, which includes revenue only from established stores, rose 4.2 percent, with an increase in the number of transactions driving most of the gain.

Rival Lowe’s Cos. will report its financial results on Wednesday.

HD closed marginally lower on Monday at $119.70, and slid moderately in pre-market activity. After the session commenced at $119.1, the stock reached the higher end at $120.75 while it hit a low of $118.73.