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What Analysts Expect from Home Depot in 2019

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Management’s guidance

For 2019, Home Depot’s (HD) management expects its revenue to rise by 3.3% and its SSSG (same-store sales growth) to be at 5.0% on a 52-week basis. For the same period, they are expecting the company’s diluted EPS to be at $10.03, which represents year-over-year growth of 3.1%.

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Analysts’ revenue expectations

Analysts are expecting Home Depot to post revenue of $111.4 billion in 2019, which represents a rise of 2.9% from $108.2 billion in 2018. The net addition of new stores and positive SSSG are likely to drive the company’s revenue in 2019.

Home Depot is focusing on improving its delivery and fulfillment options, enhancement of the interconnected shopping experience by reducing friction, and expanding its product offerings to drive its SSSG.

In June 2018, Home Depot’s management announced it would invest $1.2 billion over the next five years to reinforce its supply chain and also improve its efficiency. The company plans to add 170 distribution facilities during the period, which would allow it to deliver products in one day to 90% of the US population.

Home Depot has been investing in various initiatives to create a value proposition for its professional customers. By the end of the first quarter, HD had 135,000 customers on its new B2B (business-to-business) website. HD is targeting an increase in its B2B website customer base to 1 million by the end of this year. It is also working on expanding its rental business by investing in more space, more tools, and better technology to attract more professional customers. It’s expanding its online offerings in the home decor, auto, pool, and workwear categories, which it later plans to extend to its in-store assortments.

EPS growth

Analysts expect Home Depot’s EPS to rise 2.5% to $10.14 in 2019. The revenue growth and share repurchases are likely to drive the company’s EPS. However, some of the increases in EPS are likely to be offset by lower EBIT margin and a higher effective tax rate.

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