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Factors Likely to Influence Home Depot's (HD) Earnings in Q2

·5-min read

The Home Depot, Inc. HD is expected to register top and bottom-line growth when it reports second-quarter fiscal 2022 results on Aug 16, before market open. The Zacks Consensus Estimate for its fiscal second-quarter earnings of $4.95 per share suggests growth of 9.3% from the year-ago period’s reported figure. The consensus estimate has moved up by a penny in the past seven days.

The consensus mark for quarterly revenues is pegged at $43.3 billion, indicating growth of 5.4% from the figure reported in the year-ago quarter.

In the last reported quarter, the company delivered an earnings surprise of 11.4%. The leading home improvement retailer delivered an earnings surprise of 7.2% in the last four quarters, on average.

The Home Depot, Inc. Price and EPS Surprise

 

The Home Depot, Inc. Price and EPS Surprise
The Home Depot, Inc. Price and EPS Surprise

The Home Depot, Inc. price-eps-surprise | The Home Depot, Inc. Quote

Key Factors to Note

Home Depot’s second-quarter fiscal 2022 performance is likely to have benefited from the continued strong demand for home improvement projects, a robust housing market and ongoing investments. The company has been witnessing a rise in average ticket, driven by high-value purchases by home builders, which has been aiding comparable store sales. HD is expected to have witnessed growth in the Pro and DIY customer categories, along with digital momentum, in the fiscal second quarter.

Home Depot has been witnessing significant benefits from the execution of its "One Home Depot" plan focused on expanding the supply chain, technology investments and digital enhancements. The company’s interconnected retail strategy and underlying technology infrastructure have been consistently boosting web traffic for the past few quarters. This is expected to have aided digital sales in the to-be-reported quarter.

However, Home Depot is likely to have witnessed continued cost pressures in second-quarter fiscal 2022, driven by the impacts of inflation, supply-chain dynamics and the consumer spending environment. Higher transportation costs and product mix are expected to have resulted in a higher cost of goods sold in the fiscal second quarter, leading to a lower gross margin. Further, the investments in its supply chain are expected to have marred the gross margin in the to-be-reported quarter.

On its last reported quarter’s earnings call, management expected the uncertainties relating to the supply-chain issues, inflation and the overall consumer environment to persist throughout fiscal 2022.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Home Depot has a Zacks Rank #3 and an Earnings ESP of -0.17%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Ulta Beauty ULTA currently has an Earnings ESP of +3.27% and a Zacks Rank of 2. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 results. The consensus mark for ULTA’s quarterly revenues is pegged at $2.2 billion, which suggests a rise of 11.7% from the figure reported in the prior-year quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ulta Beauty’s earnings has moved up 1.3% to $4.84 per share in the past 30 days. The consensus estimate indicates 6.1% growth from $4.56 reported in the year-ago quarter.

Dollar General DG currently has an Earnings ESP of +0.99% and a Zacks Rank of 2. The company is likely to register increases in the top and bottom lines when it reports second-quarter fiscal 2022 numbers. The consensus mark for DG’s quarterly earnings has moved up by a penny in the past seven days to $2.92 per share. The consensus estimate suggests 8.6% growth from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $9.4 billion, which suggests growth of 8.4% from the figure reported in the prior-year quarter.

Williams-Sonoma WSM currently has an Earnings ESP of +2.23% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 results. The consensus mark for WSM’s quarterly revenues is pegged at $2.03 billion, which suggests 4.1% growth from the figure reported in the prior-year quarter.

The consensus mark for WSM’s quarterly earnings has moved down 1.1% in the past 30 days to $3.47 per share. The consensus estimate suggests growth of 7.1% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Dollar General Corporation (DG) : Free Stock Analysis Report
 
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WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report
 
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