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Home Depot earnings preview: Americans turn to home improvements during lockdown

home depot earnings preview

The Home Depot (HD) is expected to report boosted first-quarter results on Tuesday as Americans flocked to home improvement stores to decorate their homes during lockdown.

Analysts are expecting higher sales for the quarter as the home improvement store chain has managed to stay open after being classified as “essential” during the coronavirus pandemic.

Over the course of the first quarter, which run February to April, foot traffic at Home Depot rose 10% from a year ago, according to data from SafeGraph.

Revenues are expected to come in at $27.6bn, which represents a 4.6% jump compared to the previous year. According to analysts from Zacks.com, the company has benefited from a solid combination of strong in-store safety measures that have attracted consumers during the outbreak along with positive performance from its online sales department.

Meanwhile, earnings per share are expected to end the quarter at $2.28, virtually unchanged from the earnings it reported a year before, despite the higher revenues.

Analysts estimate profit margins may have shrunk during the quarter as a result of additional safety measures the company had to put in place to operate during the health emergency. These measures include the continuous supply of face masks and thermometers for its stores along with a cut in working hours.

Home Depot stock has outperformed both market-wide indexes, such as the S&P 500 and the Dow Jones Industrial Average, so far this year, as investors favored the company’s capacity to remain open during the pandemic.

The stock has flown higher than its closest rival, Lowe’s, returning 22% more than its peer during the same time period.

Shares of the Atlanta-based retailer opened the session with a 1.20% gain, trading at $237.10, mildly above its 12-month average price target of $234.

HD stock chart ytd

Home Depot will hold its first-quarter earnings conference call on 19 May at 9 a.m. ET, prior to the market’s opening bell.

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    Alejandro Arrieche

    Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.

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