Why Analysts Expect Home Depot’s Revenue to Rise in 2Q17
2Q17 revenue estimate
In 2Q17, analysts are expecting Home Depot (HD) to post revenue of $27.8 billion, which represents a 5.0% rise from $26.5 billion in 2Q16.
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Home Depot’s 2Q17 revenue growth is expected to be driven by the addition of new stores in the last four quarters and positive SSSG (same-store sales growth). Compared to 2Q16, the company was operating six more stores at the end of 1Q17. These new stores and the stores opened in 2Q17 are expected to drive the company’s 2Q17 revenue.
To drive its SSSG, Home Depot has been focusing on product innovations, implementation of digital advancements, and enhancing the customer experience for its Pro customers. The company has implemented enhanced delivery offerings in all its continental US stores. It has also extended credit terms for its private label Pro card and is focusing on delivering a frictionless experience to its Pro customers through the One Home Depot approach.
Home Depot is rolling out the next level of integration of Interline, which allows Interline customers to shop at Home Depot using a swipe card linked to their Interline accounts. This interconnected retail strategy has enhanced customer satisfaction. Along with these initiatives, the rise in the housing price index and growth in US home resales are also expected to drive the company’s SSSG in 2Q17.
For the next four quarters, analysts are expecting Home Depot to post revenue of $100.3 billion, which represents a 4.8% rise from $95.7 billion in the corresponding period of the previous year. Revenue growth is expected to be driven by positive SSSG and the addition of new stores. The company’s management has set the SSSG guidance for 2017 at 4.6%. Home Depot plans to add six new stores in 2017.
Next, let’s look at Home Depot’s estimated margins.