Home Depot Inc. (NYSE: HD) reported second-quarter 2018 results before markets opened Tuesday. The home improvement superstore posted diluted net earnings per share of $3.05 in the quarter, on revenues of $30.5 billion. In the same quarter last year, the company reported EPS of $2.25 and revenues of $28.11 billion. Consensus estimates had called for EPS of $2.84 and revenues of $30.03 billion for the latest period.
In a sharp reversal from first-quarter results, same-store sales rose 8.0% globally and 8.1% in the United States. Same-store sales growth badly missed estimates in the first quarter, coming in at 4.2% globally and just 3.9% in the United States. The second quarter produced far better results.
Second-quarter results were good enough that the company now says it expects full-year sales growth of 7.0% and same-store sales growth of around 5.3%. Home Depot also raised its full-year EPS estimate from $9.31 to $9.42.
A tight and expensive housing market does not encourage current homeowners to trade up. Instead, they tend to stay put and remodel or renovate. There is little indication that this situation will change this year, and that is good news for Home Depot.
CEO Craig Menear said:
We were very pleased with our record second quarter sales and earnings. Not only did our seasonal business rebound from the first quarter, but our overall results exceeded our expectations. These results exemplify the outstanding execution of our combined team of store associates, merchants, suppliers and supply chain.
Cost of sales rose 7.8% to $20.1 billion and operating expenses were up 9.3% to $5.46 billion. Operating income rose year over year by 9.8% to $4.9 billion. Net profit grew 31.2% to $3.51 billion.
Customer transactions rose 3.1% to 455.4 million, but the average ticket increased by 5% to $66.20. Sales per square foot rose 8.6% to $504.20.
The stock traded up about 2.2% in Tuesday’s premarket session at $198.35, in a 52-week range of $146.89 to $207.61. The 12-month consensus price target on the shares is $212.55.