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Home Depot raises profit outlook on steady demand, shares climb

Home Depot raises profit outlook on steady demand, shares climb
Published - May 17, 2022 @ 3:25 PM (EET)

Atlanta-based home improvement retailer Home Depot (NYSE:HD) reported first-quarter earnings that topped expectations and raised its full-year profit forecast.

Shares of the company shot up 4.6% in premarket trading Tuesday following the beat. 

Sales for the first quarter of fiscal 2022 came in at $38.9 billion, an increase of $1.4 billion or 3.8% from the year-ago period, topping expectations of $36.72 billion.  Comparable sales increased 2.2% and 1.7% in the U.S.

Chief Executive Officer Ted Decker said in a statement,

"The solid performance in the quarter is even more impressive as we were comparing against last year's historic growth and faced a slower start to spring this year."

As of 1 May 2022, the company held $2.8 billion in cash and equivalents, and net cash provided by operating activities for the quarter totaled $3.8 billion.

Home Depot ended the quarter with a total of 2316 operating retail stores and employs approximately 500,000 associates.


According to analysts, sales from DIY customers have slowed as pandemic-related restrictions ease, and with inflation that keeps climbing, consumers may put off renovation projects even further. 

However, despite higher lumber and copper costs driving price increases of products, Tuesday's results show that demand from home-improvement professionals is holding up.

Home Depot is now expecting sales growth of about 3% and earnings per share growth in the mid-single digits for 2022, compared with previous expectations that it would be slightly positive.

Over the long run, Home Depot has done an exceptional job growing revenue and earnings.  Investors can, therefore, reasonably assume Home Depot will settle into a nice spot as soon as economies reach renewed stability.

So far this year, shares of Home Depot are down nearly 29%, while the Dow Jones Industrial Average has shed 11.3%.

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