Home Depot (HD) is the latest company to release earnings this week and can be added to watchlists.
HD stock is expected to see top and bottom-line growth when it reports third-quarter fiscal 2022 results on Nov 15, before the market opens.
HD – Daily Chart
Traders can see that the $333 level is the target for solid earnings and could also trade a breakout of that level.
The consensus Estimate for its fiscal third-quarter earnings of around $4.11 per share would mark a growth of 4.9% from last year’s reported figure.
Quarterly revenues are expected to be $37.9 billion, indicating a growth of 3% from the previous quarter. We expect the company’s fiscal third-quarter total revenues to increase 2.7% year over year to $37,823.8 million and the bottom line to improve 4.9% to $4.12 per share.
In the previous quarter, Home Depot delivered an earnings surprise of 2%. The home improvement retailer produced an earnings surprise of 7.2% in the last four quarters, on average.
Home Depot’s third-quarter performance is likely to have benefited from the continued strong demand for home improvement projects, a more robust housing market, and investments. The company has seen high-value purchases by home builders. This has been helping comparable store sales. For the fiscal third quarter, growth of 6.1% is expected in average tickets, offset by a 2.5% decline in customer transactions.
HD is also expected to have witnessed growth in the Pro and DIY customer categories and digital momentum in the fiscal third quarter.
Home Depot has been gaining substantial benefits from its “One Home Depot” plan, which focuses on expanding the supply chain, technology investments, and digital enhancements. The company’s retail strategy and technology infrastructure is expected to increase digital sales in the upcoming earnings.
However, the company could have seen cost pressures in the third quarter of 2022 due to inflation, supply-chain dynamics, and consumer spending. Higher transportation costs are expected to have resulted in higher cost of goods sold in the third quarter, leading to lower gross margins. That is anticipated to show a gross margin contraction of 20 bps to 33.9%.
Furthermore, recent company supply chain investments are expected to hit gross margins.
