Home Depot Hits Home Run with Solid Q1 Results

Home improvement retailer The Home Depot, Inc. (NYSE: HD) has reported better-than-expected results for the fiscal first quarter ended May 1, 2022.

Following the upbeat earnings, shares of the company rose almost 1.7% to close at $301.25 in Tuesday’s extended trading session.

Revenue & Earnings

Home Depot reported net sales of $38.91 billion for the quarter, up 3.8% from the previous year. Further, the figure topped the consensus estimate of $36.72 billion. The rise in net sales can be attributed to the 2.2% and 1.7% year-over-year growth witnessed in overall comparable sales and U.S. comparable sales, respectively.

Earnings per share (EPS) for the quarter came in at $4.09, up 6% year-over-year. Moreover, the figure surpassed the consensus estimate of $3.68 per share.

Other Operating Metrics

The company’s operating income improved 2.6% from the previous year to $5.93 billion. Also, the average ticket size increased 11.4% year-over-year to $91.72. Meanwhile, sales per retail square foot rose 2.7% year-over-year to $621.99.

However, the number of customer transactions declined 8.2% from the year-ago quarter to 410.7 million.

Management’s Take

The CEO of Home Depot, Ted Decker, said, “Fiscal 2022 is off to a strong start as we delivered the highest first quarter sales in Company history. The solid performance in the quarter is even more impressive as we were comparing against last year’s historic growth and faced a slower start to spring this year. These results are a direct reflection of our associates’ continued ability to effectively navigate a challenging and dynamic environment. I would like to thank them and our many partners for their hard work and dedication to our customers.”

Stock Rating

Consensus among analysts is a Strong Buy based on 16 Buys and three Holds. HD’s average price target of $359.61 implies upside potential of 19.5% from current levels. Shares have declined 5% over the past year.

Positive Sentiments

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on HD, as 9.4% of portfolios tracked by TipRanks increased their exposure to HD stock over the past 30 days.

Conclusion

Although the reduced number of customer transactions and the prevalent high inflation scenario remain headwinds for the company, Home Depot’s solid results with growth in key operating metrics bode well for it.

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