The Home Depot, Inc (NYSE:HD)
The Home Depot, Inc. will report its fiscal third quarter 2016 results before the market open Tuesday, November 15, 2016. The street consensus is for $1.58 earnings per share on $23.04 billion in revenues. Lets take a closer look at what the analysts have to say.
HD Analyst Opinion
Analysts at Wedbush securities had the following comments leading up to The Home Depot’s earnings release.
The Wedbush View:
We expect HD to report a solid 3Q16 on Tuesday, November 15 BMO, but see potential for moderating growth over the next two quarters. Despite a likely stronger finish to the quarter that creates more upside than downside risk to our and the consensus 4.5% comp estimate (4.9% U.S.), mixed macro signals, uncertain consumer behavior following the presidential election,
tough comparisons and our leading indicator model point to slower sales growth ahead.While HD's execution remains strong, enabling it to maintain outperformance vs. a less consistent LOW, and many internal growth drivers remain intact, a less sanguine outlook keeps us sidelined on HD. Big ticket a focus; slower demand and tougher comparisons in 2H16. HD's big ticket comps are facing their toughest compares of the year as reports from other discretionary product retailers point to softness.
Appliances, for example, have aided HD comps by ~50 bps for the last three quarters. Indications from both Whirlpool and Association of Home Appliance Manufacturers (AHAM) North American T6 unit shipment data albeit rebounding in September from a softer July/August suggest softer sales trends in 3Q16. The appliance replacement cycle may be in the later stages based on a typical 10 year replacement rate and appliance sales peaking in the middle of last decade.
Slowing trends coupled with increased competition from new entrants such as J.C. Penney (JCP) and promotional activity in the category (LOW) will likely reduce the ~50 bps comp boost HD has been getting from appliances in recent quarters. This slowing demand may be partially offset by an increasing mix of Pro sales, which typically carry higher tickets.
About The Home Depot, Inc.
The Home Depot, Inc. (The Home Depot), incorporated on June 29, 1978, is a home improvement retailer. The Company sells an assortment of building materials, home improvement products, and lawn and garden products, and provides various services. The Home Depot stores average approximately 104,000 square feet of enclosed space, with over 24,000 additional square feet of outside garden area.
The Home Depot stores serve three primary customer groups: do-it-yourself (DIY) customers, do-it-for-me (DIFM) customers and professional customers. The Company has approximately 2,270 stores located throughout the United States, including the Commonwealth of Puerto Rico and the territories of the United States Virgin Islands and Guam, Canada and Mexico.