How Much Upside Is Left in Home Depot Stock?

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Part 2
How Much Upside Is Left in Home Depot Stock? PART 2 OF 5

Analysts Expect Home Depot’s Revenue to Rise in Next 4 Quarters

Revenue estimates

Analysts are expecting Home Depot (HD) to post revenue of $102.2 billion in the next four quarters, which represents a 5.0% rise from $97.4 billion in the corresponding four quarters of the previous year.

Analysts Expect Home Depot&#8217;s Revenue to Rise in Next 4 Quarters

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Revenue growth

Before Home Depot’s 2Q17 earnings release, analysts were expecting the company’s revenue to be $101.6 billion. Strong 2Q17 earnings and the devastation caused by Hurricanes Harvey and Irma could have compelled analysts to raise their revenue estimates by 0.60% from their earlier estimates.

Home Depot’s revenue growth is expected to be driven by positive SSSG (same-store sales growth), the addition of new stores, and the acquisition of Compact Power Equipment. Home Depot acquired Compact Power Equipment on July 6, 2017, for $265.0 million.

For 2017, the company’s management has set its SSSG guidance at 5.5%. SSSG is expected to be driven by growth in the repair and remodel market, the enhancement of customer experience through interconnected online experiences, and the expansion of its brand portfolio. The re-emergence of first-time homebuyers and the fast appreciation of home prices are expected to increase sales in the repair and remodel market.

The company is also focusing on enhancing the mobile experience for its customers through an interconnected retail approach and the blending of its physical and digital spaces. Under new integration, which has been rolled out, Interline customers are able to make purchases from Home Depot stores using swipe cards that are linked to their Interline accounts.

During 3Q17, the company has expanded its portfolio by introducing PPG Timeless paint, which is said to be more durable.

Peer comparisons

During the same period, Williams-Sonoma (WSM), Lowe’s Companies (LOW), and Bed Bath & Beyond (BBBY) are expected to post revenue growth of 3.2%, 2.8%, and 2.5%, respectively.

Next, we’ll take a look at analysts’ EPS (earnings per share) estimates.


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