Home Depot beat Wall Street revenue forecasts for the fourth quarter of 2024.The retailer said, however, that customers are still putting off major renovation projects.That's due to higher interest rates in recent years, its CEO and CFO said.Home Depot beat Wall Street estimates in the fourth quarter of 2024, but said that customers were still putting off bigger home improvement projects amid higher interest rates. Revenue climbed 14% compared to the same period in 2023. On a comparable sales basis, a metri ...

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].