Home Depot prints lower than expected revenue and same-store sales in the third quarter

Home Depot prints lower than expected revenue and same-store sales in the third quarter
  • Home Depot misses targets for revenue and same-store sales in the third quarter.
  • Adjusted earnings per share marginally beat the forecast.
  • Stock drops by 5% and is currently trading at around $225.
  • Brian Nagel of Oppenheimer says poor performance was due to an internal issue.
  • Home Depot cuts estimate for the fiscal year 2019.

The largest home improvement retailer in the United States of America, Home Depot, announced its Q3 earnings report on Tuesday. Having missed the target for revenue and same-store sales, the stock were reported to have dropped by 5% later on Tuesday. The figure for adjusted earnings per share, however, was marginally better than the forecast.

The stock opened at $230.50 on Tuesday. After losing around 5% following the performance results for the third quarter, it closed for the day at $225.85 that marked a monthly low for Home Depot.  The bigger picture for the home improvement retailer has been widely positive, though. Share prices were reported at $172.41 at the start of the year. Having made a year-to-date high of around $238, Home Depot has remained above the opening level in the past 11 months.

Figures For Earnings Per Share, Revenue, And Same-Store Sales

On the basis of Refinitiv’s survey, Wall Street had forecasted $27.53 billion in revenue for Home Depot in the third quarter of 2019. The actual figure came out to be significantly lower than the estimate and was reported at $27.22 billion. Anticipation for same-store sales was 4.7% as per Wall Street that missed the target and printed a lower than expected 3.6% growth. Adjusted earnings per share, however, noted a slight gain and was highlighted at $2.53 as compared to the Wall Street estimate of $2.52.

According to Brian Nagel of Oppenheimer, Home Depot has missed the Q3 targets due to an internal issue. Pointing at the increasing demand for home improvement products, he further added that macroeconomic affairs like tariffs, economic headwinds, lumber price deflation, etc. had nothing to do with the worse than expected results for Home Depot in 2019’s third quarter.

Jefferies analyst, Jonathan Matuszewski, commented following the Q3 report that Home Depot continues to earn as high as 45% of its business from the professional customers. Despite relentless efforts of Lowe’s, the competitor fails to strike more than 25% of the business in this ground.

Other Noticeable Figures Included In The Report

Other noticeable figures in the report include the net income for Home Depot dropping to $2.8 billion from $2.9 billion that was noted in the same quarter of last year. As per the home improvement retailer, the average customer ticket in 2019’s Q3 was $66.36 that improved sharply as compared to 2018. Sales per square foot also hiked to $449.17 (year-over-year).

Following the Q3 results, Home Depot has cut its sales estimate for the fiscal year 2019 to 1.8% growth that was previously forecasted at 2.3%. Same-store sales growth was also reduced to 3.5% from the previously highlighted 4%.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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