Why Analysts Are Expecting Home Depot’s Revenues to Rise in 3Q17
In 3Q17, analysts are expecting Home Depot (HD) to post revenue of $24.5 billion, which represents an increase of 5.9% from $23.2 billion in fiscal 3Q16. The revenue growth is expected to be driven by the addition of new stores, positive SSSG (same-store sales growth), and the acquisition of Compact Power Equipment in July 2017.
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Compared to 3Q16, Home Depot operated six more stores by the end of 2Q17. These new stores are expected to drive Home Depot’s revenue in 3Q17. The company acquired Compact Power Equipment in July 2017 for $265.0 million. With 1,000 stores located in the US and Canada, Compact Power Equipment provided compact equipment rentals service. The acquisition is expected to enhance equipment and tool rental offerings for professional customers.
Home Depot’s management has set its SSSG guidance to be in the range of 5.5% for 2017. The SSSG is expected to be driven by enhanced customer experience, product innovations, and the next level of integration of Interline. During 3Q17, Home Depot has expanded its PPG branded products. The company has launched PPG TIMELESS paint, which is available in the exterior and interior category. The company has also introduced vinyl plank flooring from LifeProof. Also, the company expects the roll-out of the next level of integration with Interline, where Interline customers can purchase from Home Depot stores using swipe cards linked to Interline accounts, to drive SSSG.
SSSG is also expected to be driven by favorable macro factors such as the rise in the housing price index, higher housing turnover, lower unemployment, and a rise in labor wages.
Home Depot’s management has set the 2017 revenue growth guidance to be at 5.3%. For the next four quarters, analysts are expecting the company to post revenue of $102.4 billion, which represents growth of 5.2% from $97.4 billion.
Next, we’ll look at analysts’ EPS expectations for Home Depot.