Home Depot profit tops estimates as re-modelling spree endures
HOME Depot’s third- quarter profit topped analysts’ estimates, and the company raised its forecast for earnings this year, signaling confidence that Americans will continue pouring money into their houses.
Profit rose to US$ 1.60 a share in the quarter through Oct 30, the Atlanta-based company said last Tuesday in a statement. Analysts estimated US$ 1.58, on average.
The results show that the largest home-improvement chain still is benefiting from robust demand for re-modelling supplies, even as other parts of the retail industry slow down. With housing values continuing to rise, Americans see their properties as investments and are more willing to spend on fixing them up.
Revenue climbed 6.1 per cent to US$ 23.2 billion, topping analysts’ US$ 23 billion projection.
Sales at stores open for more than a year – a key benchmark for investors – rose 5.5 per cent.
That beat analysts’ 4.4 per cent prediction, according to Consensus Metrix.
The strong results spurred Home Depot to increase its forecast for profit in its current fiscal year to US$ 6.33 a share, up from a previous projection of US$ 6.31. The company reaffirmed its forecast that revenue will rise 6.3 per cent in the year.
Home Depot rose 1.8 per cent to US$ 129.99 at 6.35am in early trading in New York. The shares had slid 3.5 per cent this year through last Monday. Rival Lowe’s Cos., which reports results last Wednesday, had fallen 7.9 per cent.
Home prices have been rising at a pace of around five per cent for two years, supported by continued hiring, rising wages and low- cost mortgages amid a limited supply of houses, especially on the cheap end. Data released by S& P CoreLogic Case
Shiller last month showed that trend continuing, with its 20- city property values index increasing 5.1 per cent in August.
That’s sending more customers to Home Depot and prompting them to spend more when they get there.
Home Depot had 380 million customer transactions in the quarter, up 2.4 per cent from a year earlier. The average purchase rose three per cent to US$ 59.78. — WP-Bloomberg