Should You Buy Home Depot After Earnings?

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Source: Thinkstock

Source: Thinkstock

On Tuesday morning, the nation’s largest home improvement retailer – Home Depot (NYSE:HD) — reported first-quarter earnings that were roughly in-line with analyst expectations. The company had sales of $19.7 billion, which was 2.9 percent higher than sales in the same quarter of 2013. This figure was light relative to analyst estimates, which were for $20 billion in sales. Furthermore, this number was light when compared with the company’s own estimate for sales for the full year, which are supposed to grow at 4.8 percent. The company maintained this forecast.

If we turn to earnings, we see a rosier picture. The company grew its profits from $1.23 billion, or $0.83/share to $1.38 billion, or $1.00/share. This is a 20.5 percent increase in earnings per share, or a 12.2 percent increase in net earnings. Note that the 2014 figures include a $0.04/share gain, or about $57 million gain from the company’s sale of its stake in HD Supply. If we exclude this one time gain, the EPS number grew 15.7 percent and the net earnings number grew 7.3 percent. The difference is the result of Home Depot’s rather aggressive, yet effective stock repurchase program.

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