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Home improvement retail giant Home Depot (NYSE:HD) reported Q2 CY2024 results topping analysts' expectations, with revenue flat year on year at $43.18 billion. Its non-GAAP profit of $4.67 per share was flat year on year.
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Home Depot (HD) Q2 CY2024 Highlights:
- "During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects."
- Revenue: $43.18 billion vs analyst estimates of $42.71 billion (1.1% beat)
- EPS (non-GAAP): $4.67 vs analyst estimates of $4.55 (2.7% beat)
- Lowered full year guidance for same-store sales, gross margin, and operating margin
- Gross Margin (GAAP): 33.4%, in line with the same quarter last year
- Free Cash Flow Margin: 10.9%, down from 13.5% in the same quarter last year
- Locations: 2,340 at quarter end, up from 2,326 in the same quarter last year
- Same-Store Sales fell 3.3% year on year (-2% in the same quarter last year)
- Market Capitalization: $342.9 billion
Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.
Home Improvement RetailerHome improvement retailers serve the maintenance and repair needs of do-it-yourself homeowners as well as professional contractors. Home is where the heart is, so any homeowner will want to keep that home in good shape by maintaining the yard, fixing leaks, or improving lighting fixtures, for example. Home improvement stores win with depth and breadth of product, in-store consultations for customers who need help, and services that cater to professionals. It is hard for non-focused retailers and e-commerce competitors to match these. However, the research, convenience, and prices of online platforms means they can’t be fully written off, either.
Sales GrowthHome Depot is a behemoth in the consumer retail sector and benefits from economies of scale, an important advantage giving the business an edge in distribution and more negotiating power with suppliers.
As you can see below, the company's annualized revenue growth rate of 6.7% over the last five years was sluggish as its store footprint remained relatively unchanged.
This quarter, Home Depot reported decent year-on-year revenue growth of 0.6%, and its $43.18 billion in revenue topped Wall Street's estimates by 1.1%. Looking ahead, Wall Street expects sales to grow 5.1% over the next 12 months, an acceleration from this quarter.
Same-Store SalesA company's same-store sales growth shows the year-on-year change in sales for its brick-and-mortar stores that have been open for at least a year, give or take, and e-commerce platform. This is a key performance indicator for retailers because it measures organic growth and demand.
Home Depot's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 1.9% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.
In the latest quarter, Home Depot's same-store sales fell 3.3% year on year. This decrease was a further deceleration from the 2% year-on-year decline it posted 12 months ago. We hope the business can get back on track.
Key Takeaways from Home Depot's Q2 Results The quarter itself was mixed, with a same-store sales miss but an EPS beat. Looking ahead, guidance was disappointing, as the company lowered its full year outlook for key line items such as same-store sales, gross margin, and operating margin. Management called out a difficult macro. The stock traded down 2.3% to $337.99 immediately after reporting.
![Home Depot (NYSE:HD) Beats Q2 Sales Targets But Lowers Guidance](https://d68-invdn-com.investing.com/content/pic1a4157f3766d2068f24d12328cf693f0.jpeg)