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Could Home Depot’s 1Q18 Earnings Boost Its Stock?

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May. 11 2018, Published 11:26 a.m. ET

Stock performance

Home Depot (HD) is set to announce its 1Q18 earnings before the market opens on May 15. As of May 10, Home Depot was trading at $187.16, which represents a 0.1% rise since its 4Q17 earnings announcement on February 20.

In 4Q17, Home Depot posted adjusted EPS (earnings per share) of $1.69 on revenue of $23.9 billion, against analysts’ EPS estimate of $1.61 and revenue estimate of $23.7 billion. The company also outperformed analysts’ SSSG (same-store sales growth) estimate of 6.0% by posting SSSG of 7.5%. Despite posting strong 4Q17 results, the company saw its stock stay flat due to lower-than-expected SSSG guidance provided by the company’s management. The company’s management has set its 2018 SSSG guidance at 5.0%, which was lower than analysts’ expectations. Also, broader equity market weakness due to US-China trade tensions has impacted the company’s stock price.

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Year-to-date performance

Last year was a good one for Home Depot, which saw its stock price rise 41.4. However, since the beginning of 2018, the company’s stock has fallen 1.5%. In comparison, peers Lowe’s (LOW), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY) have fallen 8.5%, 7.1%, and 23.1%, year-to-date, respectively. The broader comparative S&P 500 (SPX) and the SPDR S&P Homebuilders ETF (XHB) have returned 1.8% and -10.7%, respectively.

Series overview

In this series, we’ll look at analysts’ revenue and EPS expectations for 1Q18. We’ll also cover management’s guidance and analysts’ estimates for 2018. Finally, we’ll end this series by looking at Home Depot’s valuation and analysts’ recommendations. Let’s start our analysis by looking at analysts’ revenue expectations for Home Depot.

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