The Home Depot, Inc. (NYSE:HD) is one of the stocks Jim Cramer recently shed light on. Highlighting the negative response to the company’s latest quarterly earnings results, Cramer urged investors to pay attention to the company’s conference call, as he said:
“We got results from Cramer fave, Home Depot, a stock I’m very happy to own for the Charitable Trust, but the numbers confused a lot of people… The quarter was good. See, you can’t judge earnings by the headline numbers alone… For starters, management emphasized that the momentum they saw in the back half of last year carried into the first half of this year…
The second positive, what’s known as the cadence… of the quarter. While Home Depot’s same-store sales were up just 1%, eh, right, not so great, things look different when you examine them month to month to month…
Management highlighted they’re seeing broad-based strength in the business with… 12 of the 16 merchandising categories posting positive same-store sales. That’s very positive… Now, you might be worried about the impact of tariffs on Home Depot’s profitability, but in the conference call, management reminded us that 50% of their goods are sourced domestically. So there will be a tariff hit, but it will be much smaller than you might’ve expected… As a result, management expects to see gross margin improvement in the second half of the year… No one expected that, believe me.
Here’s the bottom line: Despite the softer headline numbers, the details we got from Home Depot show a business that’s gaining strength, especially with the prospect of lower interest rates on the horizon. That’s why I’m confident that Home Depot’s a long-term story, and why the stock rallied in response to the quarter that many investors wrote off immediately. It’s just so intact. That’s because they didn’t listen to the conference call. Now, if you’re a member of the investing club, you would know we are holding this one for the long term. And the move up that we saw last week, believe me, you ain’t seeing nothing yet from Home Depot.”
Rob Wilson / Shutterstock.com
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer that offers building materials, home décor, lawn and garden products, and maintenance supplies. It also delivers installation services, rents tools, and operates digital platforms for homeowners, contractors, and professional users.
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Disclosure: None. This article is originally published at Insider Monkey.
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