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Will the US Economic Slowdown Impact Home Depot’s EPS?

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Dec. 4 2020, Updated 10:52 a.m. ET

Home Depot’s 2Q16 EPS

In 2Q16, Home Depot (HD) posted EPS (earnings per share) of $1.97. It represented year-over-year revenue growth of 15.3%. After strong 2Q16 earnings, the company’s management raised its EPS guidance for fiscal 2016 to $6.31.

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Analysts’ estimates

Analysts expect Home Depot to post EPS of $6.7 in the next four quarters—growth of 12.8% from $5.9 in the same quarters last year. The EPS growth is expected to be driven by revenue growth, expanded EBITDA margins, and share repurchases in the next four quarters.

Analysts expect the company’s EBITDA margins to expand from 15.7% to 16.5%. By the end of 2Q16, the company had ~$4.9 billion available under its share repurchase program. Share repurchases reduce the number of shares outstanding. It boosts the company’s EPS.

Peers comparisons

For the next four quarters, analysts expect Lowe’s (LOW), Bed Bath & Beyond (BBBY), and Williams-Sonoma (WSM) to post EPS growth of 22.3%, 1.2%, and 2.4%, respectively.

Dividends

Analysts expect Home Depot to pay dividends of $2.9 in the next four quarters. It represents 12.6% growth from $2.6 in the same quarters last year. In comparison, Lowe’s, Bed Bath & Beyond, and Williams-Sonoma are expected to pay dividends of $1.4, $0.52, and $1.4 in the next four quarters.

Next, we’ll look at Home Depot’s valuation multiple.

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