Home Depot Delivers Strong Q1 Results, Net Earnings Nearly Double

Home Depot (HD) delivered solid first-quarter results, boosted by increased demand for home renovations and construction. Net sales were up 32.7% to $37.5 billion, affirming a strong start to the year. The increase came as the home improvement supplies company benefited from strategic investments and strong demand for home improvement projects.

Global comparable sales were up 31%, and comparable sales in the U.S. surged 29.9%. Net earnings nearly doubled, coming in at $4.1 billion or $3.86 per diluted share, compared to net earnings of $2.2 billion or $2.08 per share reported in the same quarter last year. Diluted net earnings were up 85.6% year-over-year.

“I am proud of the resilience and strength our associates have continued to demonstrate, and I would like to thank them and our supplier partners for their hard work and dedication to our customers,” stated Craig Menear, Chairman, and CEO.

Home Depot ended the first quarter with 2,298 retail stores spread across the United States, Canada, Guam, Mexico, and the U.S. Virgin Islands. (See Home Depot stock analysis on TipRanks)

Following the Q1 financial results, Oppenheimer analyst Brian Nagel has reiterated a Hold rating on the stock. According to the analyst, normalization in spending trends as COVID-19 effects subside could continue to weigh heavily on sales and growth at the home improvement company.

Nagel believes investors should be cautious, as Home Depot’s comparable stores are facing significant challenges.

“We look very favorably upon today’s report from HD and view the company’s recent sales and profit strength as another clear signal of underlying operating prowess at the chain and of management’s ability to capitalize well on continued COVID-19-related upheaval in the broader consumer landscape,” Nagel wrote in a research note to investors.

He continued, “We recommend clients remain on the sidelines with HD, at least for now, particularly as comparisons for the chain are turning significantly more challenging.”

Consensus among analysts on Wall Street is a Strong Buy based on 14 Buy and 3 Hold ratings. The average analyst price target of $351.21 implies 10.9% upside potential to current levels.

HD scores a “Perfect 10” on TipRanks’ Smart Score rating system, suggesting it is likely to outperform the overall market.

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