The Home Depot, Inc. (HD): Can This Home Improvement Retailer Improve Your Portfolio?

Page 1 of 2

The Home Depot, Inc. (NYSE:HD)is the biggest home improvement chain in the country, and has returned 20% gains to investors just to start 2013, including dividends. In addition, rising home sales and consumer confidence are playing into the thesis that Home Depot’s business is thriving.

After such strong performance, both in terms of the company’s underlying results as well as its stock price, should investors jump on the Home Depot bandwagon?

The Home Depot, Inc. (NYSE:HD)

U.S. housing showing signs of life

The housing market continues to improve, as evidenced by a variety of housing-related data points, which can only mean good things to come for The Home Depot, Inc. (NYSE:HD). According to the Standard & Poor’s Case-Schiller housing index, home prices rose 1.1% in March. This exceeded expectations and represented the biggest annual gain in nearly seven years.

Furthermore, existing home sales increased 4% in May, reaching the highest level since November 2009, according to the National Association of Realtors.

It stands to reason that as the housing market improves and consumers feel better about their homes and their personal finances, spending on housing should increase.

Industry-leading performance

These industry tailwinds are already being felt in Home Depot’s underlying results. Last year was a terrific one for the company. Earnings per diluted share in fiscal 2012 were $3, compared to $2.47 per diluted share in fiscal 2011, an increase of 21.5% year over year. These results reflect a nonrecurring charge of $0.10 per diluted share. On an adjusted basis, earnings per diluted share in fiscal 2012 were $3.10, representing an increase of 25.5% versus the prior year.

In addition, The Home Depot, Inc. (NYSE:HD)’s success has continued to start 2013. The retailer’s first-quarter same-store sales, which include only those locations open at least one year, increased 4.3% year over year. Meanwhile, diluted earnings per share soared 22% from the same period one year ago.

Unfortunately, not all home improvement chains are created equal. Close peer Lowe’s Companies, Inc. (NYSE:LOW) has not seen great results in recent quarters.

First, the company reported diluted earnings per share for the fourth quarter and full fiscal year of $.26 and $1.69, respectively. Full-year sales inched up less than 1% versus 2011. Then, Lowe’s provided a disappointing first-quarter report that revealed its sales fell 0.5% from the same period one year ago.

Furthermore, while the company’s first-quarter earnings per share rose 14% year over year, the results missed analyst expectations.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!