Core Viewpoint - Both Home Depot (HD) and Lowe's (LOW) have shown positive year-over-year comparable sales growth for the first time in eight periods, indicating a potential recovery in the home improvement market [3][4][17]. Group 1: Quarterly Results - Home Depot's comparable store sales increased by 0.8% year-over-year, with U.S. comparable sales rising by 1.3% [4]. - Lowe's comparable store sales rose by 0.2% year-over-year, surpassing the consensus estimate of a -1.4% decline [5][4]. - Both companies have reported their second consecutive positive readings on comparable sales, suggesting improving performance in existing locations [8][4]. Group 2: Valuation - Lowe's shares are trading at a lower forward 12-month earnings multiple compared to Home Depot, with a significantly lower PEG ratio [10]. - Lowe's is projected to achieve a 4.3% year-over-year EPS growth this fiscal year, while Home Depot is expected to see only 1.6% growth [10]. - Given the current PEG ratios, Lowe's valuation appears more attractive [10]. Group 3: Estimate Revisions - Analysts have revised EPS expectations more negatively for Home Depot compared to Lowe's following the latest earnings releases [12][16]. - The stability in Lowe's earnings picture is viewed positively, while the downward revisions for Home Depot raise concerns [16]. - Top line revisions for both companies' upcoming earnings reports have been marginally positive [16]. Group 4: Overall Outlook - Despite near-term uncertainties in the home improvement market, the positive change in comparable sales for both companies suggests potential momentum [17]. - Lowe's shares are currently considered the better investment based on valuation, forecasted EPS growth, and a more favorable earnings outlook following recent results [18].

Core Viewpoint - Home Depot remains a strong dividend stock despite facing challenges in the current macroeconomic environment, with a long-term investment thesis intact [2][5][10]. Company Performance - Home Depot's market capitalization has increased from approximately $50 billion 15 years ago to over $380 billion today, indicating strong stock performance [2]. - In fiscal 2023, comparable sales fell by 3.5% and diluted EPS decreased by 9.5%, reflecting a multiyear downturn [4]. - The company's stock has increased by around 11% over the last three years and 57% over the last five years, although it is underperforming compared to the S&P 500 [5]. Macroeconomic Challenges - High interest rates are making home improvement financing more expensive, while elevated mortgage rates are discouraging home purchases [7]. - Existing home sales in the U.S. are near a 10-year low, down approximately 20% from pre-pandemic levels, indicating a strained housing market [8]. - The Case-Shiller Home Price Index is at a 10-year high, contributing to affordability issues for potential homebuyers [7][8]. Dividend Growth - Home Depot has consistently raised its quarterly dividend from $0.25 per share in 2011 to $2.25 per share in 2024, showcasing a commitment to dividend growth [11]. - The company has a dividend yield of 2.3%, making it an attractive option for passive income investors [12]. Valuation and Future Outlook - Home Depot's current price-to-earnings (P/E) ratio is 26.2, with a forward P/E of 24.5, indicating a reasonable valuation despite appearing slightly overvalued [14]. - The acquisition of SRS Distribution for $18.25 billion is expected to enhance Home Depot's exposure to the contractor market, although the full benefits may take time to materialize due to industry slowdowns [15][16]. - Fiscal 2025 may see a slight uptick in sales and earnings post-integration of SRS, even if interest rates remain high [17].

Group 1: Home Depot Q4 Results - Home Depot's Q4 sales reached $39.7 billion, a 14% increase year over year from $34.78 billion, exceeding estimates of $39.14 billion [2] - The Q4 EPS was $3.13, beating expectations of $3.04 by 2.96% and rising 11% from $2.82 per share a year ago [3] - Home Depot has exceeded the Zacks EPS Consensus for 19 consecutive quarters since August 2020 [3] Group 2: Lowe's Q4 Expectations - Lowe's Q4 sales are estimated to have dipped 1% to $18.35 billion compared to $18.6 billion in the prior year quarter, while earnings are expected to rise 3% to $1.83 per share from $1.77 [5] - Lowe's has exceeded bottom line expectations for 22 consecutive quarters since August 2019 [5] - The Zacks ESP indicates Lowe's could surpass earnings expectations with a Q4 EPS estimate of $1.85, 1% above the Zacks Consensus [6] Group 3: Stock Performance & Valuation - Home Depot and Lowe's trade at forward earnings multiples of 24.4X and 18.9X, respectively [8] - Lowe's trades below the S&P 500's average of 22.5X forward earnings and at a discount to the Zacks Retail-Home Furnishings Industry average of 22.1X [9] - Home Depot's stock has gained +24% over the last three years, while Lowe's has gained +9%, both underperforming the S&P 500 [10] Group 4: Dividend Comparison - Home Depot offers a 2.35% annual dividend yield, while Lowe's yield is at 1.94%, both exceeding the S&P 500's average of 1.21% [12] - Home Depot's yield is above the industry average of 2.13% [12] Group 5: Investment Outlook - Both Home Depot and Lowe's stock hold a Zacks Rank 3 (Hold), suggesting potential rewards for long-term investors [15] - There may be better buying opportunities ahead amid recent market volatility and macroeconomic uncertainty [15]

Core Insights - Consumers are delaying large renovation projects due to unfavorable macroeconomic conditions, impacting the U.S. housing market [1][5] - Home Depot's CEO noted ongoing pressure on large remodeling projects attributed to uncertain macroeconomic conditions and high interest rates [1][5] - The average rate on a 30-year fixed mortgage remains just under 7%, contributing to a "golden handcuff" effect in the housing market, limiting supply [4][5] Company Performance - Home Depot's sales for professional customers outpaced do-it-yourself customers in the fourth quarter [3] - The company is not anticipating changes in the interest rate environment or improvements in housing turnover, expecting continued pressure on larger remodeling projects [5] Market Conditions - Pending home sales unexpectedly fell by 5.5% in December, pulling back from a 21-month high, indicating a slowdown in the housing market [5][7] - The National Association of Home Builders/Wells Fargo Housing Market Index for single-family housing dropped to its lowest level in five months due to tariff uncertainties [6]

Core Insights - Housing turnover is limited due to elevated mortgage rates and potential tariffs impacting the housing market, but Home Depot is expected to see increased business as homeowners resume renovations [1][5] - Americans are anticipated to move forward with delayed relocation and renovation plans, accepting current mortgage and inflation rates, leading to a surge in construction projects that will benefit home improvement businesses like Home Depot [2] - Homeowners are unable to indefinitely postpone investments in their homes, and a thaw in the major renovation freeze is suggested by recent data from Home Depot [3] Company Performance - Home Depot's transactions valued at $1,000 or more increased by 0.9% year-over-year in the final quarter of 2024, contrasting with a 6.8% decline in the third quarter [3] - Slightly more Americans are utilizing home equity to finance projects, indicating a potential shift in consumer behavior towards larger remodeling projects [4] - Home Depot shares rose nearly 3% following the company's latest earnings report, reflecting positive market sentiment [4]

Financial Data and Key Metrics Changes - Total sales for fiscal year 2024 were $159.5 billion, an increase of 4.5% from the previous year [6][33] - Adjusted diluted earnings per share for the fourth quarter were $3.13, compared to $2.86 in the prior year, reflecting a 9.4% increase [7][37] - Gross margin for the fourth quarter was approximately 32.8%, a decrease of 25 basis points from the previous year [33] - Operating margin for the fourth quarter was 11.3%, down from 11.9% in the same quarter last year [35] Business Line Data and Key Metrics Changes - In the fourth quarter, 10 of the 16 merchandising departments posted positive comps, including appliances and building materials [23] - Comp sales in the fourth quarter increased by 0.8%, with U.S. stores seeing a 1.3% increase [7][31] - Online sales, excluding the impact of an extra week in the quarter, increased approximately 9% compared to the fourth quarter of last year [24] Market Data and Key Metrics Changes - 15 of the 19 U.S. regions delivered positive comps in the fourth quarter, with Canada and Mexico also reporting positive comps in local currency [8] - The company experienced a net contribution of approximately $220 million in hurricane-related sales, positively impacting total company comps by approximately 65 basis points for the quarter [32] Company Strategy and Development Direction - The company remains focused on creating the best interconnected shopping experience and growing its Pro wallet share through strategic investments [9][10] - The acquisition of SRS contributed $6.4 billion in sales for the seven months of ownership, with expectations for mid-single-digit organic growth in fiscal 2025 [11][41] - Plans to open 13 new stores in fiscal 2025, building on the 12 new stores opened in fiscal 2024 [13][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying momentum of the business, despite uncertainties in the macroeconomic environment [40] - The company expects total sales growth of approximately 2.8% and comp sales growth of approximately 1% for fiscal 2025 [41][43] - Management noted that while there are signs of normalization in the home improvement market, continued pressure on larger remodeling projects is anticipated [40] Other Important Information - 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 [39] - Return on invested capital was approximately 31.3%, down from 36.7% in the previous year [38] Q&A Session Summary Question: What is the macro housing backdrop and its impact on comp sales? - Management indicated that while there was slight improvement in housing turnover, they do not expect a significant rebound in new housing starts or mortgage rates [47][48] Question: Were the increases in appliances and paint volume-driven? - Management noted that the positive performance was a combination of healthy transactions and unit performance across various categories [60][62] Question: What market share assumptions are embedded in the 2025 outlook? - Management expects the overall market to be flat, with continued strength in their business initiatives contributing to incremental sales [71][72] Question: How is the SRS acquisition impacting the bottom line? - Management confirmed that SRS is cash accretive and contributing positively to both top and bottom lines, with a mix impact of about 40 basis points [105][106] Question: What is the current pricing environment? - Management stated that the pricing environment has settled into a rational market, with no significant changes in promotional activity compared to pre-COVID levels [106][108]

Core Insights - Home Depot is strategically investing to enhance its position in the professional market, focusing on digital and in-store offerings to provide greater value and convenience to professional customers [1][3] - The company reported a 9% increase in digital sales and positive growth in its professional market during the fourth quarter [2][4] - Home Depot's pro strategy includes improving the shopping experience through digital upgrades, workforce training, and expanding its store presence, with plans to open 12 new stores in 2024 and 13 in 2025 [3][4] Financial Performance - Home Depot reported a 0.8% increase in comparable sales for the first time in two years, with fourth-quarter sales rising 14.1% to $39.7 billion [7] - For the full fiscal year 2024, total sales increased by 4.5% to $159.5 billion, although comparable sales dropped by 1.8% [7] - The company provided guidance for a 2.8% rise in total sales for the first quarter amid a volatile macroeconomic environment [8] Strategic Initiatives - The company is focused on winning a greater share of wallet from professional customers by enhancing delivery experiences and improving customer engagement across channels [5][6] - Home Depot's omnichannel strategy is supported by a report indicating that nearly 40% of consumers are now click-and-mortar shoppers, utilizing both digital and physical channels [6] - Executives expressed optimism about the investments made in 2024 and the potential for continued momentum into 2025, despite uncertainties in the macroeconomic environment [9]

Core Viewpoint - Home Depot Inc reported strong fourth-quarter results, leading to a rise in its stock price, with analysts providing positive outlooks despite conservative guidance for future growth [1][2]. Financial Performance - Home Depot's fourth-quarter adjusted earnings were $3.13 per share, exceeding the consensus estimate of $3.01 per share [2]. - The company's net sales increased by 14.1% year-on-year to $39.7 billion, surpassing the consensus of $39.2 billion [2]. - Comparable sales grew by 0.8%, which was better than the expected contraction of 1.5% [4]. Growth Metrics - There was an acceleration in both average ticket size and transactions during the quarter, marking the first positive transaction growth since Q1 2021 [3]. - Management provided guidance for 2025, projecting sales growth of approximately 2.8%, which is below the consensus of 3.3% [3]. Analyst Ratings - Goldman Sachs analyst Kate McShane maintained a Buy rating with a price target of $410 [2]. - JPMorgan analyst Christopher Horvers kept an Overweight rating, noting the first year-on-year earnings growth since Q4 2022 [4]. Future Guidance - Home Depot expects a 1.0% increase in comparable sales, 2.8% sales growth, and a gross margin of 33.4%, which is flat year-on-year [5]. - The company anticipates a 2% decline in adjusted EPS to $14.93 [5].

Core Viewpoint - Home Depot's fourth-quarter financial results show a revenue increase of 14%, but the underlying economic challenges persist, impacting comparable-store sales and profitability [3][4][6]. Financial Performance - Revenue for Q4 FY24 was $39.7 billion, up from $34.8 billion in Q4 FY23, representing a 14% increase and beating expectations [2]. - Adjusted earnings per share rose to $3.13 from $2.86, a 9% increase, also exceeding expectations [2]. - Operating margin decreased to 11.3% from 11.9%, a decline of 60 basis points [2]. Comparable-Store Sales - Comparable-store sales increased by 0.8% in Q4, with U.S. stores performing slightly better at 1.3% [5]. - For the full year, comparable-store sales were down 1.8%, indicating ongoing challenges in consumer traffic [5]. Economic Environment - The challenging macroeconomic environment, characterized by rising interest rates, has negatively impacted the housing market and home improvement spending [3][10]. - Operating expenses grew faster than revenue, with selling, general, and administrative expenses increasing by 15.7% in Q4 and 8.1% for the year [7]. Market Reaction - Shares showed a slight increase in premarket trading, reflecting that results were in line with investor expectations [8]. Future Outlook - Management projects revenue growth of just below 3% for 2025, with comparable-store sales expected to rise about 1% [9]. - The company plans to open 13 new stores to drive revenue growth, but profitability is expected to remain under pressure, with operating margin forecasted to decline to 13% [9].

Financial Data and Key Metrics Changes - Sales for fiscal 2024 were $159.5 billion, an increase of 4.5% from the previous year. Comp sales declined 1.8% from the same period last year [7][47] - Adjusted diluted earnings per share for fiscal 2024 were $15.24, essentially flat compared to the prior year [50] - In the fourth quarter, comp sales increased 0.8% from last year, with U.S. stores up 1.3% [8][45] - Gross margin for the fourth quarter was approximately 32.8%, a decrease of 25 basis points from the previous year [47] - Operating margin for the fourth quarter was 11.3%, compared to 11.9% in the fourth quarter of 2023 [49] Business Line Data and Key Metrics Changes - Comp performance for the fourth quarter saw ten of the sixteen departments posting positive comps, including appliances and building materials [32][35] - Comp transactions increased 0.6% and comp average ticket increased 0.2% during the fourth quarter [33] - Incremental sales of over $1 billion were driven by investments in pro capabilities across seventeen markets [27][110] Market Data and Key Metrics Changes - The company reported a net contribution of approximately $220 million in hurricane-related sales, positively impacting total company comps by approximately 65 basis points for the quarter [46] - Foreign exchange rates negatively impacted total company comps by approximately 70 basis points for the quarter [46] Company Strategy and Development Direction - The company remains focused on creating the best interconnected shopping experience and growing its pro wallet share through strategic investments [9][11] - The acquisition of SRS contributed $6.4 billion in sales for the seven months of ownership, with expectations for mid-single-digit organic sales growth in fiscal 2025 [12][15] - Plans to open thirteen new stores in fiscal 2025, expanding the company's footprint in areas of population growth [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying momentum of the business, despite uncertainties in the macroeconomic environment [56] - The outlook for fiscal 2025 includes total sales growth of approximately 2.8% and comp sales growth of approximately 1% [57][59] - Management noted that while the home improvement market is normalizing, uncertainties remain, particularly regarding larger remodeling projects [56][68] Other Important Information - The company announced a 2.2% increase in its quarterly dividend to $2.30 per share, equating to an annual dividend of $9.20 [53] - Merchandise inventories were $23.5 billion, up approximately $2.5 billion versus last year, with inventory turns increasing to 4.7 times [52] Q&A Session Summary Question: On the macro housing backdrop and comp sales - Management noted that while there was slight improvement in housing turnover, they do not expect a significant rebound in new housing starts or mortgage rates [66][68] Question: On appliances and paint category performance - Management indicated that the positive performance in these categories was driven by both volume and market share gains [78][82] Question: On monthly U.S. comps and weather impact - Management acknowledged that weather had a significant impact on January results, complicating the analysis of exit run rates [88] Question: On market share assumptions for 2025 - Management expects overall market conditions to remain flat, with continued share gains driven by investments in interconnected capabilities and the SRS acquisition [94][96] Question: On the impact of government efficiency measures and immigration policy - Management has not seen significant impacts from these factors on business performance [104] Question: On incremental sales from pro capabilities - Management reported generating $1 billion in incremental sales in seventeen markets, outperforming top markets [110][111] Question: On operating margin guidance and SRS impact - Management clarified that the operating margin guidance reflects a mix impact from SRS and natural deleverage due to comp performance [140]