On Tuesday, Home Depot Inc HD stock is trading higher in a volatile session after the home improvement retailer reported its fourth-quarter 2024 results and provided its 2025 outlook.HD reported fourth-quarter sales growth of 14.1% year-over-year to $39.70 billion, beating the consensus estimate of $39.14 billion. Adjusted EPS was $3.13 (+9.4% year over year), beating the consensus of $3.00. Customer transactions for the quarter rose 7.6%. Comparable sales increased 0.8%, and comparable sales in the U.S. ro ...

Financial Performance - Fourth quarter sales for fiscal 2024 were $39.7 billion, an increase of $4.9 billion, or 14.1% from the same period in fiscal 2023[1] - Net earnings for the fourth quarter were $3.0 billion, or $3.02 per diluted share, compared to $2.8 billion, or $2.82 per diluted share in the same period of fiscal 2023[3] - Fiscal 2024 sales totaled $159.5 billion, an increase of $6.8 billion, or 4.5% from fiscal 2023[4] - Comparable sales for fiscal 2024 decreased by 1.8%, with comparable sales in the U.S. also decreasing by 1.8%[4] - Adjusted diluted earnings per share for fiscal 2024 were $15.24, compared to $15.25 in fiscal 2023[5] - Diluted earnings per share (GAAP) increased to $3.02 in the three months ended February 2, 2025, up 7.1% from $2.82 in the same period of 2024[29] - Adjusted diluted earnings per share rose to $3.13 in the three months ended February 2, 2025, a 9.4% increase from $2.86 in 2024[29] Dividend and Guidance - The company announced a 2.2% increase in its quarterly dividend to $2.30 per share, equating to an annual dividend of $9.20 per share[7] - Fiscal 2025 guidance includes total sales growth of approximately 2.8% and diluted earnings-per-share expected to decline approximately 3% from $14.91 in fiscal 2024[9] Store Operations - The company operated a total of 2,347 retail stores and over 780 branches across various regions at the end of the fourth quarter[9] Customer Metrics - Customer transactions increased to 400.4 million in the fourth quarter, a 7.6% increase from 372.0 million in the same period of fiscal 2023[15] - Average ticket for the fourth quarter was $89.11, a slight increase of 0.3% from $88.87 in the same period of fiscal 2023[15] Assets and Liabilities - Total assets increased to $96,119 million in 2025 from $76,530 million in 2024, representing a growth of 25.6%[18] - Total current liabilities increased to $28,661 million in 2025 from $22,015 million in 2024, an increase of 30.2%[18] - Long-term debt, excluding current installments, rose to $48,485 million in 2025 from $42,743 million in 2024, an increase of 13.4%[18] Cash Flow and Expenditures - Net cash provided by operating activities decreased to $19,810 million in 2025 from $21,172 million in 2024, a decline of 6.4%[20] - Capital expenditures rose to $3,485 million in 2025, compared to $3,226 million in 2024, an increase of 8.0%[20] - Payments for businesses acquired surged to $17,644 million in 2025 from $1,514 million in 2024, reflecting a significant increase of 1,065.5%[20] Operating Income - Adjusted operating income for the fiscal year 2025 was $21,951 million, a marginal increase of 0.3% from $21,875 million in 2024[25] Yearly Earnings Comparison - Net earnings for the fiscal year ended February 2, 2025, were $14,806 million, a slight decrease of 2.2% from $15,143 million in 2024[20]

Group 1 - Home Depot reported fourth-quarter adjusted earnings per share (EPS) of $3.13 on revenue of $39.70 billion, surpassing analysts' expectations of $3.03 EPS and $39.12 billion in revenue [1] - The company anticipates total sales growth of approximately 2.8% in 2025, with a 1% increase in comparable store sales, which is below analysts' expectations of 3.27% and 1.88% respectively [2] - Home Depot projects a decline in full-year adjusted EPS by about 2% from $15.24 in 2024, contrary to the analyst consensus predicting an increase to $15.63 [2] Group 2 - Comparable store sales for Q4 increased by 0.8% year-over-year, defying analysts' forecast of a 1.48% decline, marking a turnaround after eight consecutive quarters of decline [3] - The company and its competitor Lowe's have indicated that inflation and a post-pandemic slowdown in home-improvement projects have negatively impacted sales [3]

Core Insights - The Home Depot reported strong fourth quarter results for fiscal 2024, with sales reaching $39.7 billion, a 14.1% increase from the previous year [2][4] - The company experienced a net earnings increase to $3.0 billion, or $3.02 per diluted share, compared to $2.8 billion, or $2.82 per diluted share in the same period of fiscal 2023 [4][6] - For fiscal 2024, total sales were $159.5 billion, up 4.5% from fiscal 2023, but comparable sales decreased by 1.8% [6][8] Fourth Quarter 2024 Performance - Sales for the fourth quarter were $39.7 billion, an increase of $4.9 billion from the previous year [2] - Comparable sales increased by 0.8%, with U.S. comparable sales up 1.3% [2] - The fourth quarter included 14 weeks, contributing approximately $2.5 billion in sales, which is not included in comparable sales results [3] Fiscal 2024 Overview - Total sales for fiscal 2024 were $159.5 billion, an increase of $6.8 billion, or 4.5% from fiscal 2023 [6] - Net earnings for fiscal 2024 were $14.8 billion, or $14.91 per diluted share, down from $15.1 billion, or $15.11 per diluted share in fiscal 2023 [6] - Adjusted diluted earnings per share for fiscal 2024 were $15.24, slightly down from $15.25 in fiscal 2023 [7] Dividend Declaration - The board of directors approved a 2.2% increase in the quarterly dividend to $2.30 per share, equating to an annual dividend of $9.20 per share [9] Fiscal 2025 Guidance - The company anticipates total sales growth of approximately 2.8% and comparable sales growth of approximately 1.0% for fiscal 2025 [10] - Expected diluted earnings per share are projected to decline approximately 3% from $14.91 in fiscal 2024 [10] - Capital expenditures are estimated to be approximately 2.5% of total sales [10] Operational Metrics - At the end of the fourth quarter, The Home Depot operated 2,347 retail stores and employed over 470,000 associates [12] - Customer transactions increased to 400.4 million in the fourth quarter, a 7.6% increase from the previous year [17]

Group 1 - The article emphasizes that secular movements within an industry can be as significant as overall business cycles, indicating that investment trends are not always linear [1] - It highlights that while certain industries may experience long-term growth, all sectors will eventually face periods of both prosperity and downturns [1]

Group 1 - Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) are scheduled to report earnings this week [1] - Nvidia is set to report earnings on Wednesday [1] - Investors are anticipating a new week of key economic and inflation data [1]

Core Viewpoint - Home Depot, Lowe's, and TJX Companies are set to release quarterly results, with a particular focus on Nvidia's upcoming earnings report, which is expected to provide insights into the AI chip market [1][21][22] Group 1: Company Performance - Home Depot shares have slightly outperformed Lowe's in the year-to-date period, but both have significantly underperformed the broader market [1] - Home Depot's same-store sales have been negative for the last eight quarters, with a current estimate of a -1.7% decline for the upcoming report [6][7] - Lowe's is also facing pressure on same-store sales, with a current estimate of a -1.67% decline, and expected earnings of $1.82 per share on $18.29 billion in revenues, reflecting a year-over-year EPS increase of +2.8% but a revenue decline of -1.7% [8] Group 2: Market Environment - The operating environment for Home Depot and Lowe's is challenging due to unfavorable interest rates, which are impacting existing home sales and consequently their sales performance [4][5] - Elevated mortgage rates are a significant headwind for sales, as affordability issues keep potential buyers sidelined [5][10] - The Fed's easing policy may not lead to a rapid decrease in mortgage rates, suggesting that existing home sales trends are unlikely to improve in the near term [9][10] Group 3: Retail Sector Overview - In the broader retail sector, Q4 earnings for 21 retailers in the S&P 500 are up +36.8% year-over-year, with 71.4% beating EPS estimates [12][13] - The earnings growth in the retail sector is significantly influenced by Amazon, which reported a +86.9% increase in Q4 earnings [14][15] - Excluding Amazon, the rest of the retail sector has seen only a +3% increase in earnings, indicating that much of the growth is concentrated in a few key players [15]

Core Insights - Home Depot is expected to report fourth-quarter earnings with year-over-year sales growth, despite a projected decline in comparable store sales for the ninth consecutive quarter [1][5]. Sales and Earnings Expectations - Analysts anticipate adjusted earnings per share (EPS) of $3.02 and sales of $39.06 billion, an increase from $34.79 billion a year ago [3]. - Comparable store sales are forecasted to decline by 1.66% year-over-year, influenced by inflation affecting sales of big-ticket items [3]. Analyst Sentiment - The majority of analysts maintain a bullish outlook on Home Depot, with eight "buy" ratings, three "hold," and one "sell," and an average price target of approximately $433, which is about 10% above the current stock level [2][5]. - JPMorgan analysts have raised their price target for Home Depot from $450 to $475, citing its valuation compared to retail peers and adding it to their "Analyst Focus List as a growth investment" [4][5].

Core Viewpoint - Home Depot is expected to report increased revenues and earnings for the fourth quarter of fiscal 2024, driven by strategic acquisitions and improved seasonal demand [1][2][5]. Financial Performance - The Zacks Consensus Estimate for fourth-quarter revenues is $39 billion, reflecting a 12.2% year-over-year growth [1]. - The estimated earnings per share (EPS) is $3.08, indicating a 9.2% increase from the previous year [2]. - Home Depot has shown a positive earnings surprise trend, with an average surprise of 2.3% over the last four quarters [3]. Strategic Initiatives - The acquisition of SRS Distribution Inc. is expected to contribute significantly to sales growth [5][6]. - The "One Home Depot" investment strategy focuses on supply-chain expansion and digital improvements, enhancing online traffic and sales [7][19]. - The company anticipates a 4% year-over-year sales increase for fiscal 2024, supported by additional sales from the 53rd week and SRS [6]. Market Challenges - Higher interest rates and macroeconomic uncertainty are anticipated to negatively impact consumer demand for home improvement projects [8][20]. - Comparable customer transactions are projected to decline by 2.5% for fiscal 2024, affecting overall sales performance [9]. Margin and Valuation - Home Depot's gross margin is projected at 33.5% for fiscal 2024, with an operating margin of 13.5% [10][11]. - The stock trades at a forward P/E multiple of 25.23X, above the industry average of 23.12X, indicating a premium valuation [16]. Competitive Position - Home Depot's stock has gained 8.6% over the past year, underperforming compared to the broader industry and S&P 500 [12][13]. - The company maintains a competitive edge through its interconnected retail strategy and strong Pro customer growth [18][19].

Group 1 - Home Depot's stock closed at $395.43, reflecting a decline of 1.95% from the previous day, underperforming the S&P 500's gain of 0.24% [1] - Over the past month, Home Depot's shares have decreased by 3.61%, while the Retail-Wholesale sector gained 5.98% and the S&P 500 increased by 2.37% [1] Group 2 - The upcoming earnings report for Home Depot is scheduled for February 25, 2025, with an expected EPS of $3.08, indicating a 9.22% increase from the same quarter last year [2] - The Zacks Consensus Estimate projects net sales of $39.02 billion, representing a 12.17% rise from the previous year [2] Group 3 - Recent changes in analyst estimates for Home Depot are important as they reflect short-term business trends, with positive revisions indicating analyst optimism [3] - Estimate revisions are correlated with near-term share price momentum, which can be leveraged using the Zacks Rank system [4] Group 4 - The Zacks Rank system ranges from 1 (Strong Buy) to 5 (Strong Sell), with 1 stocks historically returning an average of +25% annually since 1988 [5] - Over the last 30 days, the Zacks Consensus EPS estimate for Home Depot has decreased by 0.33%, and the company currently holds a Zacks Rank of 3 (Hold) [5] Group 5 - Home Depot's Forward P/E ratio is 25.85, which is higher than the industry average of 20.08, indicating that the company is trading at a premium [6] - The current PEG ratio for Home Depot is 4.12, compared to the industry average PEG ratio of 2.03, suggesting a higher valuation relative to expected earnings growth [7] Group 6 - The Retail - Home Furnishings industry, part of the Retail-Wholesale sector, has a Zacks Industry Rank of 141, placing it in the bottom 44% of over 250 industries [7] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]