Market Overview

Home Depot's Q2 Beat Comes Amid Home Sales Decline, Rise In Median Sale Price

Home Depot's Q2 Beat Comes Amid Home Sales Decline, Rise In Median Sale Price

Shares of home improvement giants Lowe’s Companies, Inc. (NYSE: LOW) and Home Depot Inc. (NYSE: HD) are rising. Lowe’s plans to release earnings data later this month, and Home Depot’s results are indicative of the current market.

What Happened

Home Depot's second-quarter print Tuesday beat estimates.

“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,” CEO Craig Menear said in a press release

“These results exemplify the outstanding execution of our combined team of store associates, merchants, suppliers and supply chain.”

Home Depot reported Q2 earnings per share of $3.05 against a $2.84 estimate and sales of $30.46 billion against a $30.01-billion estimate. 

The retailer raised 2018 EPS growth guidance to $9.42 against a $9.45 estimate and projected full-year sales will rise 7 percent. 

Home Depot shares were trading at the $193 level Tuesday morning compared to $149.20 in August 2017, while Lowe’s shares were at $97.28 versus $73.64 in August 2017. 

Why It’s Important

Pending home sales were down over 2 percent this year, and as of June, inventory was down to 4.3 months. An inventory of six months represents a balanced market that benefits both buyers and sellers, according to the National Association of Realtors. 

Infographic courtesy of the National Association of Realtors. 

The decline in home sales and increase in median price, it is apparent that Americans are choosing to forgo buying a house and instead relying on home improvement. This trend could account for the recent surge in sales for home improvement retailers. 

What’s Next

Lowe’s plans to report second-quarter results Aug. 22, the company' first quarterly print since the addition of Marvin Ellison as CEO. 

Related Links

Earnings Preview: Home Depot To Report Results From The Busy Spring Selling Quarter

KeyBanc Raises Lowe's Price Target, Likes Ellison's Leadership Style

Posted-In: National Association of RealtorsEarnings News General Real Estate Best of Benzinga


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