Will Home Depot (HD) Stock Improve With Next Week’s Earnings Results?

Home Depot (HD) will release its fiscal 2015 third quarter earnings results before the market open on Tuesday.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Home Depot (HD) - Get Report is scheduled to announce is fiscal 2015 third quarter financial results on Tuesday before the market open.

The home improvement retailer is expected to report a year-over-year increase in earnings per share and revenue for the quarter.

Analysts have estimated earnings of $1.32 per share on revenue of $21.76 billion for the latest quarter.

Last year, Home Depot reported earnings of $1.15 per share on $20.52 billion for the quarter ended November 2, 2014.

Home Depot stock is declining 2.46% to $120.76 in afternoon trading on Friday as retailers reported weak 2015 third quarter results this week, but analysts expect the company to deliver strong results.

The Atlanta-based firm is expected to report a 6% increase in U.S. same store sales, continuing its steady growth from the first half of the year, Credit Suisse analysts said, Barron's reported.

"In-line results and strong relative outperformance versus other retailers should be enough to grind higher," analysts added.

Separately, TheStreet Ratings team rates HOME DEPOT INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate HOME DEPOT INC (HD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.25% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • HOME DEPOT INC has improved earnings per share by 13.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HOME DEPOT INC increased its bottom line by earning $4.72 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($5.31 versus $4.72).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 9.0% when compared to the same quarter one year prior, going from $2,050.00 million to $2,234.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, HOME DEPOT INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: HD

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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