HD Supply continues to execute above peers in a challenging environment this year for industrial distributors, plagued by pricing, oil & gas and FX headwinds, Barclays noted.
"HD Supply has emerged as the lone outperformer driven by strong operational execution and capital structure changes," analysts at Barclays added.
Stock performance suggests relief around concerns that oil & gas and weather would have an outsized impact in the second quarter and core average daily sales growth came in at 6.5%, according to the analyst note.
HD Supply is an industrial distributor that operates in four segments: facilities maintenance, waterworks, power solutions and construction & industrial-white cap.
Shares of HD Supply Holdings are down 0.06% to $33.93 in trading afternoon Wednesday.
Separately, TheStreet Ratings team rates HD SUPPLY HOLDINGS INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HD SUPPLY HOLDINGS INC (HDS) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Trading Companies & Distributors industry. The net income has significantly decreased by 40.9% when compared to the same quarter one year ago, falling from -$66.00 million to -$93.00 million.
- The gross profit margin for HD SUPPLY HOLDINGS INC is currently lower than what is desirable, coming in at 28.78%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.63% is significantly below that of the industry average.
- Net operating cash flow has increased to $174.00 million or 21.67% when compared to the same quarter last year. Despite an increase in cash flow, HD SUPPLY HOLDINGS INC's average is still marginally south of the industry average growth rate of 23.51%.
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- HD SUPPLY HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HD SUPPLY HOLDINGS INC continued to lose money by earning -$0.03 versus -$1.15 in the prior year. This year, the market expects an improvement in earnings ($1.92 versus -$0.03).
- You can view the full analysis from the report here: HDS Ratings Report