Home Depot (HD) will report second quarter results tomorrow at 6:00 and host a call at 9:00.
The home improvement retailer is excepted to have a strong quarter after missing same store sales estimates for the first time in seven quarters in May. Cold weather in the Spring pushed back sales of seasonal products like gardening last quarter.
Home Depot posted first quarter comparable sales growth of 4.2% (the lowest level in three years) as growth slowed to +2% in April because of the cool weather. On the call management said comps would've grown 6.5% normalized for weather. More importantly, management said comp growth rebounded to the double digits in May when the weather improved.
Analysts are looking for second quarter comps up almost 7% versus 6.3% growth in the second quarter of last year. Last quarter, Home Depot reported double-digit comp growth in appliances, electrical, and lumber while lighting and gardening were negative. Second quarter EPS is expected to grow 27% with sales up 7%.
The housing market continues to do well despite some cautious comments regarding a slowdown from Redfin (RDFN) last week. Telsey Advisory Group noted that the acceleration in comp sales growth at Tractor Supply (TSCO) bodes well for Home Depot. Whirlpool (WHR) reported second quarter sales down 2% in North America but most of their issues came on the cost side.
For the year, Home Depot expects (fiscal 2019 ending in January) EPS up 28% to $9.31 with sales up 6.7% and comps up 5%.
Home Depot's 2020 financial targets include total sales of $115-120 bln, with annual sales up 4.5-6.0% and an operating margin of 14.4-15.0%.
With a $225 billion market cap, Home Depot trades at just over 20x EPS estimates. Home Depot has consistently outperformed rival Lowe's (LOW -- reports Wednesday, August 22), which trades at just under ~18x EPS estimates.