Home Depot Q3 Earnings: Revenue And EPS Beat, Lifts Full-Year Forecast Despite Customer Traffic Dip

Home Depot Inc HD stock is trading higher after the home improvement retailer beat its third-quarter earnings estimates and lifted its full-year 2024 outlook.

HD reported third-quarter sales growth of 6.6% year-over-year to $40.217 billion, beating the consensus estimate of $39.173 billion.

Customer transactions for the quarter fell slightly by 0.2%. Comparable sales decreased 1.3%, and comparable sales in the U.S. dropped 1.2%.

Gross profit rose 5.4% YoY to $13.425 billion, with a margin of 33.4%, down 40 bps YoY. The operating margin was 13.5%, down 86 bps YoY, and operating income for the quarter dropped 0.22% to $5.418 billion. The adjusted operating margin slipped to 13.8% from 14.5% YoY.

Operating expenses increased 9.2% year over year to $8.01 billion. Adjusted EPS was $3.78 (-1.8% year over year), beating the consensus of $3.64.

The average ticket in the third quarter was $88.65, a 0.8% decrease, and sales per retail square foot declined 2.1% to $582.97.

As of October 27, the company held $1.531 billion in cash and equivalents. It generated an operating cash flow of $15.139 billion for nine months, compared to $16.439 billion a year ago.

At the end of the quarter, HD operated 2,345 retail stores and over 780 branches across the U.S., Canada, and Mexico.

“While macroeconomic uncertainty remains, our third quarter performance exceeded our expectations. As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand,” commented Ted Decker, chair, president, and CEO.

2024 Outlook raised: Home Depot raised its sales guidance from $156.49 billion – $158.01 billion to $158.78 billion versus the $157.33 billion consensus.

It expects comparable sales to decline approximately ~2.5% (prior expected to decline 3% – 4%).

HD now expects Adjusted EPS of $15.10 (representing decline of approximately 1% from $15.25 in FY23) versus the consensus of $14.84. The company sees a gross margin of ~33.5% and an adjusted operating margin of 13.8%.

Price Action: HD shares are trading higher by 1.56% at $414.65 premarket on the last check Tuesday.

Photo via Shutterstock