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The Home Depot, Inc. HD is expected to register top and bottom-line declines when it reports first-quarter fiscal 2022 results on May 17, before market open. The Zacks Consensus Estimate for its fiscal first-quarter earnings of $3.65 per share suggests a decline of 5.4% from the year-ago period’s reported figure. The consensus estimate has moved down 0.5% in the past 30 days.
The consensus mark for quarterly revenues is pegged at $36.47 billion, indicating a decline of 2.7% from the figure reported in the year-ago quarter.
In the last reported quarter, the company delivered an earnings surprise of 0.3%. The leading home improvement retailer delivered an earnings surprise of 11.1% in the last four quarters, on average.
The Home Depot, Inc. Price and EPS Surprise
The Home Depot, Inc. price-eps-surprise | The Home Depot, Inc. Quote
Key Factors to Note
Home Depot is likely to have witnessed continued cost pressures in first-quarter fiscal 2022, driven by the impacts of inflation, supply-chain dynamics and the consumer spending environment. Higher transportation costs and product mix are expected to have resulted in a higher cost of goods sold in the fiscal first quarter, resulting in a lower gross margin. Further, the adverse product mix and investments in its supply chain are expected to have marred the gross margin in the to-be-reported quarter.
On its last reported quarter’s earnings call, management expected the uncertainties relating to the supply-chain issues, inflation and the overall consumer environment to persist throughout fiscal 2022. Consequently, the company provided a conservative stance on its fiscal 2022 projections. It anticipates lower-than-anticipated sales and earnings results for the fiscal first quarter.
However, HD is likely to have benefited from the continued demand for home improvement projects, a robust housing market and ongoing investments. The company is expected to have witnessed growth in the Pro and DIY customer categories, along with digital momentum in the fiscal first quarter.
Home Depot has been witnessing significant benefits from the execution of its "One Home Depot" plan, which focuses on expanding the supply chain, technology investments and digital enhancements. The company’s interconnected retail strategy and underlying technology infrastructure have been consistently boosting web traffic for the past few quarters. This is expected to have aided digital sales in the to-be-reported quarter.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Home Depot has a Zacks Rank #4 (Sell) and an Earnings ESP of -1.67%.