Home Depot Raises Dividend After Mixed Results

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The Home Depot Inc. (NYSE: HD) reported fourth-quarter and full-year 2013 results before markets opened Tuesday. The home improvement retailer posted diluted earnings per share (EPS) of $0.73 and $17.7 billion in revenues. In the same period a year ago, the home improvement store reported EPS of $0.68 on revenue of $18.25 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.71 and $17.91 billion in revenue.

For the full year, Home Depot posted EPS of $3.76 on revenues of $78.81 billion, compared with prior year EPS of $3.00 on revenues of $74.75 billion. The consensus estimates called for EPS of $3.74 on revenues of $79.01 billion.

Fourth quarter same-store sales at all Home Depot locations rose 4.4% year over year and 4.9% in the United States.

Home Depot raised its dividend from a quarterly payout of $0.39 to $0.47 for the current quarter.

At the end of the third quarter, the company said it expected 2013 revenue growth of 5.6% and diluted EPS of $3.72 for the full year. Home Depot beat its own EPS estimate but missed its expected revenue. Annual revenue grew 5.4%

The company’s 2014 guidance calls for sales growth of 4.8% and same-store sales growth of 4.6%. EPS is pegged at $4.38, and the company expects to repurchase $5 billion in stock. Gross margins are expected to be flat and operating margins are estimated to rise 0.7%. The company also expects to open seven new stores this year.

Competitor Lowe’s Companies Inc. (NYSE: LOW) reports results Wednesday morning and is expected to post EPS of $0.31 on revenues of $11.69 billion for the quarter. For the year the consensus estimates call for EPS of $2.17 on revenues of $53.45 billion. Lowe’s stock has outperformed Home Depot’s over the past 12 months, up more than 25% compared with a rise of about 19% for Home Depot. Year to date, however, both are down about 5%.

Home Depot’s CEO said:

In 2013, we posted our strongest comp sales growth in 14 years as solid execution and the recovering housing market aided our performance.

Shares were up about 1.3% in premarket trading, at $78.60 in a 52-week range of $63.82 to $82.57. Thomson Reuters had a consensus analyst price target of around $88.70 before the results were announced.