NEW YORK (TheStreet) - Home Depot's (HD) 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.