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Home Depot Beat Analysts’ Revenue and EPS Estimates in Q1

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First-quarter performance

On May 21, Home Depot (HD) posted its first-quarter earnings. For the quarter ending on May 5, the company posted an adjusted EPS of $2.27, which beat analysts’ EPS expectation of $2.18. The company’s revenues were $26.38 billion—slightly higher than analysts’ expectation.

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YoY revenue growth

Home Depot’s revenues grew 5.7% YoY (year-over-year) from $24.95 billion in the first quarter of 2018. The revenue growth was driven by positive SSSG (same-store sales growth) and the net addition of four new stores in the last four quarters. By the end of the quarter, the company operated 2,289 stores—compared to 2,285 stores at the end of the first quarter of 2018.

For the first quarter, Home Depot posted an overall SSSG of 2.5%. The company’s SSSG in the United States was 3.0%. Due to 53 weeks in 2018, there was a shift in the calendar, which has resulted in the difference between the company’s SSSG and revenue growth. During the quarter, the company’s total customer transactions increased 3.8%, while its average ticket size increased 2.0%.

EPS growth

Home Depot’s EPS grew 9.15% YoY from $2.08. The revenue growth, increased in EBIT margin, and share repurchases drove the company’s EPS during the first quarter. However, increased interest expenses and a higher effective tax rate offset some of the EPS growth.

During the first quarter, the company’s EBIT margin rose 0.1% to 13.6%. For the first quarter, Home Depot’s effective tax rate was 24.4%—compared to 23.5% in the first quarter of 2018. Due to share repurchases in the last four quarters, the company’s weighted average common shares fell from ~1.16 million to ~1.11 million.

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