The Home Depot Inc. (HD, Financial) will be reporting its first-quarter 2017 earnings on May 16. The home improvement giant had a stellar 2016 as comparable store sales for the full fiscal year grew 5.6%, with fourth-quarter numbers showing 5.8% growth. Home Depot expects its good run to continue in 2017 as well, but perhaps at a lower rate compared to its performance in 2016. The company has forecasted comparable store sales growth of approximately 4.6% for the full current fiscal year.
One of the sour points in 2016 was the company only opened four new stores during the year. Home Depot has forecasted six new stores for fiscal 2017, piling the pressure on existing stores to keep the sales needle moving. Fortunately for the company, the home improvement market kept expanding, thus allowing Home Depot and its rival, Lowe’s (LOW, Financial), to improve their sales numbers.
Home Depot was one of the very few retailers that had a solid 2016. Many others struggled to hold on to their numbers during the year. The home improvement market has, so far, been resilient to any slowdown and remains one of the bright spots for 2017. With the U.S. economy expected to grow in the 2% to 3% range in 2017 and the increasing strength in the housing and home improvement markets, it should allow Home Depot to continue expanding its sales numbers.
“As we look to 2017, we remain encouraged by the strength of our core business and by what we are seeing in the housing environment," Chief Financial Officer Carol B. Tome said. "While private, fixed, residential investment as a percentage of GDP now stands at 3.8%, it has a way to go before it reaches the historical mean of 4.5%. Home price appreciation, housing turnover and household formation continue to be tailwinds for our business.”
Wall Street is expecting Home Depot to report $1.61 in earnings per share with revenues of $23.72 billion for the first quarter. For the first quarter of 2016, Home Depot posted sales of $22.8 billion and earnings per share of $1.44, which means Wall Street is expecting a sales growth of 4%, or slightly lower than the company’s own sales forecast for full-year 2017.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
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