Home Depot Beats Q4 Earnings & Sales as Home Improvement Stays Strong

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The Home Depot Inc. HD has reported fourth-quarter fiscal 2024 results, wherein earnings and sales surpassed the Zacks Consensus Estimate and improved year over year. HD surpassed fiscal fourth-quarter expectations with strong home improvement spending despite pressure on large remodels. Strategic investments position it for future growth.

Home Depot's adjusted earnings of $3.13 per share increased 9.4% from $2.82 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.04 per share.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales advanced 14.1% to $39.7 billion from $34.8 billion in the year-ago quarter. Also, sales surpassed the Zacks Consensus Estimate of $39.14 billion. The company’s sales benefited from an additional week in the fiscal fourth quarter, which added $2.5 billion in sales.

The Zacks Rank #3 (Hold) company’s shares have lost 4.7% in the past three months compared with the industry's 11.6% decline.

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HD is confident about its initiatives to strengthen the business. It has been on track with its investments to craft the best inter-connected experience for customers, improving the pro wallet through its unique ecosystem of capabilities and expanding stores. It is also optimistic about the future of the home improvement industry and its ability to expand market share in this space.

Detailed Picture of HD’s Q4 Results

Home Depot's comparable sales improved 0.8% in the reported quarter. The company’s comparable sales in the United States rose 1.3% in the fiscal fourth quarter. The increase resulted from the rise in customer transactions and the average ticket. In the fiscal fourth quarter, customer transactions improved 7.6% year over year, whereas the average ticket was up 0.3%. Sales per retail square foot rose 1.2%.

Our model estimated comps to decline 2.4% in the fourth quarter of fiscal 2024, led by a 1.8% decline in customer transactions and a 0.8% fall in the average ticket.

The Home Depot, Inc. Price, Consensus and EPS Surprise

The Home Depot, Inc. Price, Consensus and EPS Surprise
The Home Depot, Inc. Price, Consensus and EPS Surprise

The Home Depot, Inc. price-consensus-eps-surprise-chart | The Home Depot, Inc. Quote

In dollar terms, the gross profit rose 13.3% year over year to $13 billion in the fiscal fourth quarter. However, the gross margin of 32.8% declined 30 basis points (bps) year over year. Our model predicted a 10-bps year-over-year decline in the gross margin to 33% for the fiscal fourth quarter.

SG&A expenses of $7.7 billion increased 15.7% from $6.7 billion in the year-ago quarter. SG&A expenses, as a percentage of sales, grew 30 bps year over year to 19.5%.

The adjusted operating income rose 10.7% year over year to $4.6 billion, while the adjusted operating margin of 11.7% contracted 40 bps year over year. The decline in the operating margin resulted from soft gross margin and higher SG&A expenses, as a percentage of sales.

Our model predicted the SG&A expense rate to increase 30 bps year over year to 19.5%. Consequently, we anticipated the operating income to increase 7.7% year over year and the operating margin to contract 40 bps to 11.7% for the fiscal fourth quarter.