Analysts Are Expecting Home Depot’s Net Margins to Rise in 2Q17
For 2Q17, analysts are expecting Home Depot (HD) to post gross margins, EBITDA (earnings before interest, tax, depreciation, and amortization) margins, and net margins of 33.6%, 17.5%, and 9.5%, respectively. In 2Q16, these margins were 33.7%, 17.1%, and 9.2%, respectively.
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Factors that could affect HD’s margins
Analysts are expecting Home Depot’s expenditures gross margin to fall 0.10% in 2Q17 due to product mix. The EBITDA margin is expected to rise 0.40% due to lower SG&A (selling, general, and administrative) expenses. SG&A expenses are expected to fall due to sales leverage from positive same-store sales growth and initiatives by management to control expenditures.
During the quarter, Home Depot’s net margin is expected to rise 0.30%. Some of the expansions due to lower SG&A expenses are expected to be offset by higher D&A (depreciation and amortization) expenses and a higher effective tax rate. In 2Q17, the D&A expenses are projected to rise 0.10% to 1.7%.
For the next four quarters, analysts are expecting Home Depot to post gross margins, EBITDA margins, and net margins of 34.0%, 16.7%, and 8.7%, respectively. In the corresponding quarters of the previous year, those margins were 34.1%, 16.3%, and 8.5%, respectively.
Next, we’ll look at Home Depot’s 2Q17 EPS (earnings per share) estimate.