The Home Depot’s profit and overall revenue topped Wall Street predictions for the straight quarter as more people streamed into America’s number one home improvement retail store and spent more than they have in a long time.
According to the data released on Tuesday, Home Depot’s stock was climbing by at least one percent. The shares of the retail store stood at $189.55 on Tuesday morning, but rose by at least 4 percent to $197.13 at close of business. Here is how the store’s performed compared with what most of the financial experts were expecting:
Recently, the United States housing market has been on a winning streak, courtesy of rising employment rates and higher wages. This trend is encouraging homeowners to purchase new homes or remodel their existing ones which benefit Home Depot significantly.
The company’s chief financial officer, Carol Tome, says that they expect continued job growth in the future complemented by higher income growth and mortgage rates. Job and income growth will see appreciation in the home prices and increased demand for new homes which will push forward their sales.
According to Craig Menear, who is the CEO and Chairman of Home Depot, the ongoing commitment to improve the interconnected experience for their clients and provide localized and innovative products led to the reported record sales and revenue collection in 2017. The United States economy has become strong, and the tax reforms have greatly benefitted the housing industry.
Home Depot reported a net income for the fourth and final quarter of 2017 financial year of $1.80 billion, which translates to about $1.52 per share compared with $1.70 billion or $1.44 per share which was reported one year ago. The expenses of the company included all bonus payments as well as the positive impacts of the new taxation regulations. Brian Nagel, an Oppenheimer & Co. analyst, says that Home Depot is selling more appliances which is a reflection of where the housing industry is.
The company reported that sales at its outlets open for more than one year rose by at least 7.5 percent in the fourth quarter of the financial year that ended in January 2018. The average customer transactions rose by at least two percent, while its average check value rose by at least 5.5 percent. Home Depot is looking forward to a comparable store sales growth of at least 5 percent in the current financial year.
Another reason that led to the rise in company’s sales was the high number of people in southern U.S. and parts of Puerto Rico, whose homes were destroyed by the hurricane. Most of these people turned to the store for home repair supplies.
Coming off a strong year and a promising future, the company is looking forward to increasing its growth in the coming months and years. It expects that its sales will rise by at least 6.5 percent in 2018, while its same-store sales will go up by at least 5 percent. It has a precise outline running up to 2020, which projects an increase in its revenue to as much as $120 billion in sales alone.
The company is also bringing in a lot of new merchandise to its stores after signing a new and exciting deal with Tesla to sell the car manufacturer’s residential Powerwall batteries and solar panels at its over 800 locations. The demand for housing is set to continue in 2018, and this shortage is keeping house prices inflated. The addition of this new merchandise is expected to push the sales forward and attract new clients to its stores.
Home Depot continues to perform well against its primary rival Lowe’s. Its business models are unique and hard to replicate online. This is the reason why leading online stores such as Amazon and Walmart have focused on another line of business. All eyes are now set on the store to see how it will perform in the first quarter of the current financial year.
Regards,
Ethan Warrick
Editor
Wealth Authority
