Home Depot (HD) is trading roughly flat after reporting Q2 (Jul) earnings this morning. EPS rose 14.2% year/year to $2.25 while revenue rose 6.2% year/year to a record $28.11 bln. Both results were better than market expectations. HD reported impressive same store comps in JulQ at +6.3%, up a bit from +5.5% in AprQ. Comps for US stores was +6.6% in JulQ.
In terms of FY17 guidance, Home Depot bumped up its outlook. The company now expects sales will be up approximately 5.3% same store comps will be up approximately +5.5%, up from prior guidance of sales +4.6% and comps +4.6%. The company also raised its EPS growth guidance for the year and now expects EPS of $7.29 vs prior guidance of $7.15.
In terms of other recent developments, Home Depot announced in early July that it will acquire Compact Power Equipment, a provider of equipment rental and maintenance services for $265 mln in cash. As a long-term commercial partner of Home Depot since 2009, Compact Power Equipment currently provides compact equipment rentals at more than 1,000 stores across the US and Canada.
The acquisition allows HD to better serve its customers, particularly its Pros (contractors) customers as the deal boosts HD's equipment and tool rental offerings. It also allows HD to grow Compact Power's building services capabilities. Home Depot currently offers tool and equipment rentals at more locations across the US and Canada than anyone else, providing easy access for both Pro and Do-It-Yourself customers. Its large assortment of rental offerings saves customers from the cost and hassle of maintenance and storage.
In sum, despite the muted reaction in the stock price, this was another good quarter for Home Depot. The stock has made an impressive and steady run higher over the past few years. It was trading in the $30 range in mid-2011 and has been on a consistent and steady trajectory higher since then. This would have been a good stock to own as we exited the housing crisis in 2008-2010. It's now trading above $150.