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Home Depot casts doubt on further room for improvement after blow-out 2020

02/23/2021 | 10:25am EDT
FILE PHOTO: The logo of Home Depot is seen in Encinitas

(Reuters) - Home Depot Inc said on Tuesday pandemic-related uncertainties made it difficult to predict if its sales dream run from last year will continue into 2021, even as its quarterly sales handily beat analysts' estimates.

The home improvement chain's shares fell 5%, despite a 24.5% jump in fourth-quarter comparable sales, above analysts' estimates of an 18.9% increase.

Stuck-at-home Americans have been snapping up tools, paint and building materials all through the COVID-19 health crisis, but the roll out of vaccines and the hopes for a normal life have led many to believe that sales growth in 2021 will fade.

"Significant uncertainty remains with respect to the course of the pandemic, the distribution of vaccines and short-term fiscal policy... Given these uncertainties, we are limited in our ability to forecast demand for the year," Home Depot Chief Financial Officer Richard McPhail said.

Home Depot said if the demand environment during the back half of fiscal 2020 persists through the current year, it would imply flat to slightly positive comparable sales growth and roughly flat operating margins of 14%.

"Home Depot's scenario is a bit vague, likely weighing on the stock, while a lack of margin improvement imbedded in that outlook is disappointing as well," Wedbush analyst Seth Basham said.

Home Depot's flat margin expectations also indicate its plans to keep spending in areas such as its online business to gain market share, Basham added.

Analysts said those figures raise sales growth expectations for smaller rival Lowe's Cos Inc, which reports results on Wednesday.

Home Depot's net sales for the quarter rose 25.1% to $32.3 billion, beating estimates of $30.73 billion, according to IBES data from Refinitiv. Full-year sales rose by nearly $22 billion.

It earned $2.65 per share, above expectations of $2.62 per share, and raised its quarterly dividend by 10%.

(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli)

By Uday Sampath Kumar

ę Reuters 2021
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Financials (USD)
Sales 2022 143 B - -
Net income 2022 14 932 M - -
Net Debt 2022 34 153 M - -
P/E ratio 2022 23,1x
Yield 2022 2,03%
Capitalization 348 B 348 B -
EV / Sales 2022 2,67x
EV / Sales 2023 2,62x
Nbr of Employees 504 800
Free-Float 59,4%
Duration : Period :
The Home Depot, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends THE HOME DEPOT, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 35
Last Close Price 327,22 $
Average target price 346,64 $
Spread / Average Target 5,93%
EPS Revisions
Managers and Directors
Craig A. Menear Chairman & Chief Executive Officer
Edward P. Decker President & Chief Operating Officer
Richard V. McPhail Chief Financial Officer & Executive Vice President
Matthew A. Carey Chief Information Officer & Executive VP
Paul Antony Senior Vice President-Technology
Sector and Competitors