Home goods retailer The Home Depot Inc. (HD) published its first-quarter report earlier this week. A positive aspect is that interest in home improvement has not dwindled in the US, despite the easing of quarantines.
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While Wall Street expected 24 % revenue growth from Home Depot in the first quarter, actual results were close to 33 % YoY. The sharp increase in sales at Home Depot may be partly due to the US economic stimulus program. A large number of people remain cautious and are not eager to return to their previous activities. Additionally, the housing market in the United States has facilitated the growth of Home Depot’s sales. Several households have rethought their approach to comfortable housing after being forced to rethink their approach to habitable accommodation. They have taken advantage of the coronavirus situation to improve their living conditions. Home Depot benefitted from the renovations and improvements, resulting in higher profits. This trend has continued, with sales increasing 30% in the first two weeks of May compared to before the pandemic.
In addition to the astonishing earnings growth, earnings per share rose by 85 % year-on-year, totaling $3.86 in the first quarter.
Home Depot Inc. (HD) first-quarter results suggest the company has an optimistic outlook for the future: lifting the restrictions won’t result in a sharp drop in demand for home goods. On the other hand, the company does not predict its results by the end of the year, believing that consumer preferences may change in the second half. Revenue at Home Depot has grown by an average of 6.9 % per year over the past decade. As the earnings per share increased, Home Depot raised its earnings at an average annual rate of 19.5% during the same period.
Thus, Home Depot’s growth trends are optimistic, but they can’t guarantee that such growth rates will continue in the long run. As a result, the company will most likely gradually return to moderate but steady growth.
