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Home Depot Inc.'s (HD) first quarter report mirrored the progress of the U.S. economy during the initial stage of the recovery: modest growth, with the prospect of improving results, but not a return to robust growth.
Home Depot earned 45 cents per share in the first quarter, versus the Thomson/Reuters First Call estimate of 40 cents. A year ago, the company earned 30 cents per share.
Revenue increased 4.3% to $16.9 billion, excluding a one-time charge. Equally significant, Home Depot now expects 2010 sales to increase 3.5% and earnings to rise 21% to $1.88. The 2010 First Call earnings estimate is $1.88; First Call also expects the company to earn $2.22 in 2011.
Home Depot attributed the quarterly results to a solid performance in seasonal categories and an increase in customer traffic.
Stock Analysis: First discussed on May 20, 2009 at a price of $23.83, I still like Home Depot's shares. The argument forward here is that while no one should expect a return to the traffic levels registered during the housing bubble of the previous decade, U.S. home sales probably have bottomed and job growth has resumed. Each trend suggests incremental improvements in HD's traffic, revenue, and earnings, as the economic expansion progresses. I'd put a sell/stop loss at $16.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
5-19-2010 @ 7:45PM
Bud said...
home depots profits do not stop at selling home improvement products..there are many cases where people have bought Cabinetts or toilets and have found them stuffed with Cocain,weed,and herion,crack etc..i was helping install some plumbing products and found the toilet stuffed with herion..i thought it was the customers so i turned him in and the cops told me they get alot of reports of finding drugs in Home depot products..sometimes the products get loaded on the wrong truck and miss their intended drop off..so if any of you shop at home depot..please boycott them for a real American store like lowes or something.home depot keeps those illegals in the parking lots cause they there for a reason other than day work..they also peddle drugs for the cartel ...it's time for another mexican American war people lock and load