Home improvement chain Home Depot (HD) - Get Report delivered a positive earnings beat on Tuesday.

The company's adjusted earnings per share not only topped analysts' expectations, but the retailer reaffirmed its full-year sales guidance and raised its 2016 full-year EPS forecast.

While some analysts had suggested that Home Depot may be overwhelmed by Amazon' (AMZN) - Get Report  growing retail success, fiscal third-quarter results from Home Depot established its ability to withstand the e-commerce wave and hold on to its position.

These two key factors explain why Home Depot is a well-diversified retail giant with the capacity increase its share price in the foreseeable future.

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1. Home Depot's Unique Product Proposition

Key metrics for the home improvement segment indicates a strong consumer affinity for store visits and purchases. It's one thing to buy a book, sweater or video game online; it's another to buy lumber, large power tools or kitchen cabinetry.

In October, for the industry as a whole, building material and garden equipment sales improved 1.1% month on month and 6.5% year on year.

In the wake of Hurricane Matthew, reconstruction costs could probably come in the range of $54 billion, as per one report. Home reconstruction and improvement bills should be substantial, propelling Home Depot's and Lowe's earnings.

Regardless of the aftermath of Hurricane Matthew, Home Depot will continue to surge forward since its buying products isn't similar to ordering clothes. 

Home Depot reported comparable-store sales growth of 5.5% for its third quarter, easily besting Wall Street's estimates for a 4.4% increase.

The comparable-store sales for the U.S. were up 5.9%. The sales figures were not fueled by cheap products or discounting, which is probably why the gross margin was constant at 34.7%.

2. Home Depot's Robust Earnings Comeback

Home Depot's earnings on previous occasions have demonstrated a certain unreliability. The third-quarter results may indicate that those days of revenue misses are now over.

Numbers were positive in all categories, and sales trends showed acceleration through the quarter.

Same-store sales growth for large-ticket items (20% of U.S. sales), or transactions that are at least $900, was more than 11%.

While Home Depot, in particular, will soon be facing tough comparisons against the last holiday season, the company's business model has the ability to adjust and maintain growth.

Just ahead of the earnings announcement, investors were naturally concerned by commentary from appliance manufacturer Whirlpool; however, Home Depot proved its critics wrong.

In fact, reports suggest American consumers have increased spending on their homes, encouraged by an improving housing market scenario.

The number of customer transactions rose 2.4% in the quarter. Customers spent 3% more on average per transaction.

Bottom-line: After a good quarter, expectations from Home Depot have admittedly risen. The company now expects adjusted earnings of $6.33 per share in the fiscal year ending January 2017, higher than its previous forecast of $6.31.

The company also has said it expects net sales to rise about 6.3% for the full year and comparable-store sales to increase around 4.9%.

These rock-steady earnings will continue to support its 2.2% dividend yield and prospects for growing payouts. Home Depot is a growth stock that belongs in your long-term wealth-building portfolio.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.