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NEW YORK (TheStreet) - Home Depot's (HD) - Get Home Depot, Inc. Report third-quarter results showed that the housing industry is chugging along. The home improvement retailer reported on Tuesday quarterly same-store sales growth of 5.8% for U.S. stores and an increase in average ticket of 2.3%.

Home Depot's third-quarter profit of $1.15 a share came in 2 cents better than the average analyst estimate and 10 cents above earnings for last year's quarter. The company confirmed its guidance of fiscal 2014 sales growth of approximately 4.8%. It also reaffirmed earnings growth of 21% in fiscal 2014 to approximately $4.54 a share.

Home Depot shares fell at the close, falling 2.1% to $95.98. Here's what analysts said about its earnings results.

David Schick, Stifel (Hold)

Our thesis remains unchanged but we do actually find ourselves warming to HD ... why you ask? All in all, we think the home improvement sector trends are not as bad as 1Q14 or as good as 2Q14 suggested - weather played some push/pull role in both. So we believe the core "better than average" business elements remain at work - but with fairly full appreciation by the market (unlike in 2009-2012). So an interesting setup could be forming. If some short-term "disappointment" that the two-year stacked comp decelerated were to occur, an opportunity could present itself. We believe the variety of pro initiatives (Pro Xtra, credit) could help open up a fairly untapped market segment. Right now HD does about $6,600 with their pro customer - that's perhaps 10% of their spend. HD should be able, with more tools and offerings, be able to gain share of pro spending, over time. If pro share were to double over a decade - the incremental $25-$30 bn revenue could be a meaningful comp driver (off HD current $83 bn annual revenue run rate). Meanwhile Fannie and Freddie are discussing expanded initiatives to allow for lower down payment mortgages - though the marketplace mechanisms for such expansions remain unclear. So let's see if some deceleration can bring this deserved but well-loved story back to less of a premium. HD trades at about 11.2x on CY15 EV/EBITDA - roughly a 25% premium to our coverage average. Right now it looks like we are close to consensus for CY15 but may be ahead for CY16.

We view Home Depot's 3Q results positively, especially given the company's strong comps and margin performance. Comps grew by 5.2% vs. our estimate of 5.5% and a tough compare of 7.4% LY, driven by U.S. comps of 5.8%. Comps benefitted from continued strong spending trends among large pros, with large pro spend twice that of the company average. Additionally, we were also impressed with the strength of the company's online business, with sales up 40% during the quarter, on top of 50% last year. Home Depot's omni-channel platform is performing well, with continued increases in the number of online orders being picked up in the company's stores. Management's tone on the call around the housing environment remains constructive, especially with respect to home prices and housing turnover. We concur though it appears that Home Depot's comps are demonstrating what we would characterize as "outsized" benefits from share gains across its existing home improvement categories.

Peter Keith, Piper Jaffray (Overweight; $108 PT)

We are maintaining our Overweight rating and raising our price target from $98 to $108 on HD shares following a fundamentally strong Q3. While results were relatively in line, we remain impressed with the broad strength across the enterprise with regard to geography, product categories and customer type (DIY vs. Pro). This broad strength combined with solid execution and a multitude of interesting initiatives provide us with continued confidence looking out to 2015. While we expect EPS growth to slow modestly in 2015 due to a tough SG&A compare and (potentially) fewer share repurchases, we continue to expect HD shares to continue to outperform with solid and consistent results.

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Laura Champine, Canaccord Genuity (Hold; $93 PT)

We are lowering our Q4 EPS estimate by $0.03 to $0.91, a penny above prior consensus. The reduction is driven by a 40bps increase in our SG&A expense rate forecast to 21.7%. This still translates to a healthy 104bps of expense leverage on SSS growth of 7% on top of +4.4%, which would be the company's second best yr./yr. improvement since FY10. We are maintaining our HOLD rating with shares trading at 19x our C2015 EPS estimate and 12x C2015E EV/EBITDA.

Our long-term growth outlook remains on track. We project sales will increase at a five-year CAGR of 4% and EPS at a compounded annual rate of 14% over that span. This appears fairly reflected to us in the stock's current valuation.

"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 revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel these 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:

  • HD's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 27.57% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • HOME DEPOT INC has improved earnings per share by 22.6% 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 $3.75 versus $3.00 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $3.75).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from $1,795.00 million to $2,050.00 million.
  • 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.

-Written by Laurie Kulikowski in New York.

Follow @LKulikowski

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.