Analysts Raise Earnings Estimate on Home Depot (HD) Stock

NEW YORK (TheStreet) --Analysts at BMO Capital Markets increased their 2015 and 2016 earnings estimates to $5.30 from $5.21, and to $6.10 from $5.94, respectively, on shares of Home Depot (HD). The firm maintained its "outperform" rating with a price target of $132.

Analysts cited strong first quarter sales."The 1Q15 report gives us added confidence in our earnings outlook and reinforces the idea that we are still in the middle of the housing recovery cycle," analyst Shannon Coyne said.

"Further, demand driven by demographic (aging, millennial) and consumer spending sifts toward the home is not fleeting, in our view," she added.

Over the next five years, she highlighted that annual EPS growth would exceed that of the S&P 500.

In Thursday's morning trading, shares of Home Depot are lower by 0.29% to $111.79.

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, impressive record of earnings per share growth, 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 46.84% 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 21.0% 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 ($5.25 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 14.5% when compared to the same quarter one year prior, going from $1,379.00 million to $1,579.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues slightly increased by 6.1%. 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 Ratings Report

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