Recent retail earnings have undoubtedly proven that the market out there is tough. In fact, a sluggish economic recovery coupled with increased e-commerce competition has led to various mixed outcomes, especially for some of the top companies in brick and mortar retail. Nonetheless, the home-improvement retailers seem to be non-affected by the situation.
Since the 2008 economic crisis, the housing market has displayed a steady recovery. This recovery is well depicted by the continued recovery in home prices and growth in construction activity. According to the Wall Street Journal, the increased home prices can provide homeowners with the necessary equity to spend on appliances, cabinets and floors. The higher home prices and lower home inventories may cause most home sellers to spend more on home improvement in a bid to cash more money on their asking prices. Alternatively, potential home buyers may opt to remain at their current residence by renovating as opposed to house hunting.
Stakeholders are anxious to see if the economic backdrop will affect Home Depot Inc. when it announces its first-quarter results. During the first quarter, Home Depot is anticipated to report $1.61/share from $1.44 in Q1 2016. The management at Home Depot projects comparable store sales at 4.6% for the rest of the year. During the unveiling of the first quarter results, analysts are expected to focus on how the comp store sales rank up against the management’s estimations. Additionally, analysts are likely to look at the growth of the company’s professional business.
Home Depot’s Plans
During the previous quarter, Home Depot unveiled a new $15 billion share repurchase program. In fact, the company claimed that it would repurchase about $5 billion worth of assets in the first quarter. Also, the management unveiled the opening of just six stress during the fiscal 2017. This number is small compared to the numerous stores Home Depot currently operates. As a matter of fact, Home Depot had 2,278 retail stores across the US and some international markets. According to the results on the options side, traders have priced close to a 2.5% potential stock in either direction, which is around the Home Depot’s release of its earnings.