Home-improvement chain Home Depot easily topped fourth-quarter forecasts on Tuesday while also announcing a steep payout increase and a hefty stock repurchase.
Estimates: Earnings per share rising 14% to $1.33, with revenue up 4% to $21.793 billion.
Results: EPS of $1.44 on revenue of $22.2 billion. Total same-store sales rose 5.8%, well above the Consensus Metrix forecast of 3.5%. U.S. same-store sales climbed 6.3%. Home Depot also raised its dividend 29% to 89 cents, and approved a $15 billion repurchase program.
Outlook: Full-year EPS of $7.13, below consensus for $7.17, on sales growth of 4.6%, better than Wall Street views for 4.1% growth, with same-store sales also up 4.6%.
“Our focus on providing localized and innovative product selection, improving the interconnected customer experience, and driving productivity resulted in record sales and net earnings for 2016,” said Chairman and CEO Craig Menear in a statement. “Our associates responded to a healthy housing market and strong customer demand, and I’d like to thank them for their execution, hard work and continued dedication to our customers.”
After Home Depot reported third-quarter results in November, management expressed optimism about the housing market, saying “we believe home price appreciation, housing turnover, household formation and the aging housing stock in the U.S. continue to support growth in our business.”
After years of historically low mortgage rates, the housing market has started to see rates climb again along with Treasury yields.
In the short term, it could spur prospective homebuyers to closed deals before rates go up. But longer term, demand could suffer if rates keep rising.
Still, the NAHB’s homebuilder sentiment gauge has soared since the election. While it dipped in the latest reading, it remains high.