Home Depot Shares Decline After Forecasting Low Profits and $1 Billion Wage Investment
By Home Depot Inc. (NYSE:HD) shares declined in early trading Tuesday after the home-improvement retailer forecast a decline in fiscal-year profits and plans for a $1 billion wage investment for hourly workers.[0] The stock has dropped 8.9% in the past 12 months, lagging the S&P 500 Index’s.
In the quarter ended January 29, Home Depot reported net income of $3.36 billion, or $3.30 per share, up 0.3% from the year-ago period.[1] Revenue was $35.83 billion, also up 0.3%.[2] Analysts surveyed by FactSet had expected Home Depot to report sales of $35.97 billion, compared with $35.72 billion in the same period last year.[1]
The company’s board of directors approved a 10% increase in the quarterly dividend to $2.09 per share, which equates to an annual dividend of $8.36 per share.[3] Shareholders who are on the records at the close of business on March 9, 2023 will receive their dividend on March 23, 2023.[3] The Company has paid a cash dividend for 144 consecutive quarters.[4]
The Home Depot anticipates that sales and comparable sales will be approximately the same for the upcoming fiscal year.[5] Home Depot's projected operating margin rate of 14.5% has been affected by the $1 billion investment the company is making in wage growth.[2] Analysts on Wall Street anticipated Home Depot's earnings per share to remain similar to 2022, while sales increased by 0.4%.[6]
Going forward, the company anticipates earnings per share will decline by a mid-single-digit percentage, and sales growth is expected to be flat in the year through January 2024.[7]
The home-improvement chain noted that its fourth-quarter revenue was below analyst expectations and that it expects full-year 2023 revenue growth and comparable sales growth to be approximately flat compared to 2022.[8]
“Our ability to deliver growth on top of the $40 billion of sales growth achieved over the prior two-year period, while navigating persistent inflation, ongoing global supply chain disruptions, and a tight labor market, is a testament to investments we have made in the business, as well as our associates' relentless focus on our customers,” said Home Depot CEO Ted Decker in the release.[6]
Lowe’s Companies Inc.
0. “Home Depot Could Be on Sale for a Bit After Disappointing Guidance” RealMoney, 21 Feb. 2023, https://realmoney.thestreet.com/investing/stocks/home-depot-could-be-on-sale-for-a-bit-after-disappointing-guidance-16116410
1. “Home Depot ‘one of the best long-term stories in retail,' analyst says” MarketWatch, 17 Feb. 2023, https://www.marketwatch.com/story/home-depot-one-of-the-best-long-term-stories-in-retail-analyst-says-12a730c5
2. “Home Depot misses on revenue, issues muted outlook” CNBC, 21 Feb. 2023, https://www.cnbc.com/2023/02/21/home-depot-hd-q4-earnings-2022.html
3. “Why Home Depot (HD) Shares Are Falling Today – Home Depot (NYSE:HD)” Benzinga, 21 Feb. 2023, https://www.benzinga.com/news/earnings/23/02/30982196/home-depot-posts-mixed-q4-earnings-hikes-dividend-by-10-forecasts-decline-in-fy23-eps
4. “The Home Depot Announces Fourth Quarter and Fiscal 2022 Results; Plans to Invest Approximately $1 Billion in Annualized Compensation for Frontline, Hourly Associates; Increases Quarterly Dividend by 10 Percent; Provides Fiscal 2023 Guidance” Yahoo! Voices, 21 Feb. 2023, https://www.yahoo.com/now/home-depot-announces-fourth-quarter-110000210.html
5. “Home Depot stock slips on sales miss, cautious guidance (NYSE:HD)” Seeking Alpha, 21 Feb. 2023, https://seekingalpha.com/news/3938219-home-depot-stock-slips-on-sales-miss-cautious-guidance
6. “Home Depot Earnings Mixed; HD Stock Slides As Higher Wage Costs Hit Outlook | Investor's Business Daily” Investor's Business Daily, 21 Feb. 2023, https://www.investors.com/news/home-depot-earnings-hd-stock-slides-wage-costs-hit-outlook/
7. “Home Depot Forecasts Earnings Drop This Year” The Wall Street Journal, 21 Feb. 2023, https://www.wsj.com/articles/home-depot-forecasts-earnings-drop-this-year-138dd0f8
8. “Lowe's Stock Slides Following Home Depot's Quarterly Results: What's Going On? – Lowe's Companies (NYSE:L” Benzinga, 21 Feb. 2023, https://www.benzinga.com/news/earnings/23/02/30985515/lowes-stock-slides-following-home-depots-quarterly-results-whats-going-on
