Kang says Home Depot is an ‘attractive stock’ after Q3 earnings

Home Depot Inc (NYSE: HD) opened slightly up this morning after reporting better-than-expected results for its fiscal third quarter.

Home Depot’s guidance for the full year

On Tuesday, the home improvement retailer also narrowed its full-year guidance.

Home Depot now forecasts its per-share earnings to take a 9% to 11% hit on up to 4.0% decline in sales. On CNBC’s “Worldwide Exchange”, Nimrit Kang of NorthStar Asset Management said today:

This has been characterised as the year of moderation by Home Depot. So, we expect that the comps will continue to moderate from here.

Experts had forecast a 9.4% hit to EPS and a 3.0% decline in sales. Home Depot is currently down about 15% year-to-date.

Notable figures in Home Depot Q3 earnings

• Earned $3.8 billion versus the year-ago $4.3 billion
• Per-share earnings declined from $4.24 to $3.81
• Sales went down 3.0% year-on-year to $37.7 billion
• Consensus was $3.75 a share on $37.6 billion sales
• Same-store sales slipped a less-than-expected 3.1%

Ted Decker – the Chief Executive of Home Depot did, however, confirm in the earnings press release today that inflationary pressures, higher interest rates, and weakness in the housing market were making customers avoid certain big-ticket and discretionary categories.

Still, Nimrit Kang remains constructive on “HD”, as per her interview with CNBC on Tuesday.

Management can navigate the downturn and continue to position for long-term growth, make those important investments. On a mid to long-term view, Home Depot continues to be a very attractive stock.

She recommends owning the home improvement retailer also for a healthy dividend yield and a rather lucrative stock buyback programme.