Home Depot Raises Earnings Forecast But This Housing Gauge Weakens – Investor's Business Daily

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Home improvement retailer Home Depot (HD), a Dow Jones industrial average component, reported first-quarter earnings on Tuesday that topped Wall Street forecasts and lifted its full-year profit outlook, but a key housing-construction indicator turned lower.

Estimates: Earnings per share of $1.62, up 12.5%, on a 4% revenue increase to $23.759 billion.

Results: EPS of $1.67, up 16% vs. a year earlier, as revenue grew 4.9% to $23.887 billion. Global same-store sales rose 5.5% vs. a year earlier, topping views of 4%. U.S. comps advanced 6%, over forecasts for 4.3%.

Outlook: Home Depot raised its full-year EPS target to $7.15 from $7.13, citing expected stock buybacks. Analysts have expected $7.20. Home Depot still sees 4.6% gains for total revenue and comps.

Stock: Shares rose 2.1% to 160.58 in morning trade on the stock market today, a new record high. Home Depot shares are extended from a 137.42 buy point cleared decisively in early February.

“We were pleased with our results as they reflected broad-based growth across our interconnected platform and all geographies,” said Craig Menear, chairman and CEO, in a statement.

Rival Lowe’s (LOW), which reports first-quarter earnings next week, was up 1.1% to 86.10. Lowe’s is in buy range from an 84.10 buy point.

As other retail stocks wilt, Home Depot and Lowe’s have stayed above the fray, buoyed by a stronger housing market that has kept people busy with home repairs, add-ons and makeovers.

But the Commerce Department said after Home Depot’s earnings report that housing starts fell 2.6% to an annualized pace of 1.17 million units in April, missing forecasts for an uptick to 1.26 million. Building permits, a sign of future activity, also dropped, declining 2.5% to an annualized rate of 1.23 million, below views for 1.27 million.

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