Home Depot Beats Quarterly Earnings Expectations Amid Housing Boom


By Cristian Bustos. Originally published at ValueWalk.

Home Depot securities worst performing mega cap stocks in March 2022

Home Depot Inc (NYSE:HD) posted better-than-expected earnings for the first quarter, depicting a solid housing market in the U.S. As results showcase the best quarterly sales on record, the retailer is now raising its outlook for the full year in terms of both sales and earnings per share.

Successful Quarter

As reported by CNBC, the company posted earnings per share of $4.09 against expectations of $3.68. In terms of revenue, Home Depot accrued $38.91 billion versus an estimate of $36.72 billion.

Q1 2022 hedge fund letters, conferences and more

CEO Ted Decker said on the company’s conference call with analysts, “The strong performance in the quarter is even more impressive given the robust performance we were comparing against last year.”

Amid domestic same-store sales falls in March and April, U.S. same-store sales jumped 1.7%. The company met harder comparisons against the lift given by last year’s stimulus-check sales and an earlier spring.

“A year ago, the company reported U.S. same-store sales growth of 29.9%,” CNBC reports.

Some experts say that Home Depot’s solid results help tail off the talk of an economic recession, as they are a barometer of the housing market.

Dodging Inflation

Home Depot also managed to stay away from the harshest effects of inflation. While transactions dropped by 8.2%, sales grew amid increasing prices as the average purchase ticket increased by 11.4% —thanks to consumers buying premium items.

Decker said, “While we don’t know how inflation might impact consumer behavior going forward, we are closely monitoring elasticities and customer trends across our respective categories and geographies and remain encouraged by the underlying strength we see in the business.”

While inflation might deter consumers from home renovation projects for at least a year, they used the early Covid-restriction period to carry out DIY projects.

Despite rising mortgage rates and tight supply, the housing market is still sizzling. Still, questions remain as to how home improvement retailers will cope. according to brokerage Jefferies, between 40% and 45% of Home Depot’s customers are professionals.

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