Home Depot boosted its earnings and sales forecasts for the year as the continued rise of U.S. home prices encourages Americans to fix up their houses.
Profit this year will be $5.31 to $5.36 a share, including the planned completion of the Interline Brands acquisition, the Atlanta-based company said Tuesday in a statement. That’s up from a previous forecast of $5.24 to $5.27. Analysts estimated $5.27, not including the Interline takeover.
The world’s largest home-improvement retailer is benefiting from 40 straight months of rising U.S. housing prices, which make homeowners more confident about investing in their dwellings. Americans also may be betting on future gains, since home prices still haven’t returned to their 2006 peak.
The results strengthen the “view that the home-improvement sector will continue to meaningfully outpace the rest of the retail sector,” Scott Tuhy, a senior credit officer at Moody’s Investors Service, said in an e-mail.
The shares already had gained 14 percent this year through Monday. Lowe’s Cos., which is scheduled to report earnings on Wednesday, climbed 5.3 percent in that period.
Net income in the three months through Aug. 2 increased 9 percent to $2.23 billion, or $1.73 a share, from $2.05 billion, or $1.52, a year earlier. Excluding some items, profit was $1.71 a share, matching analysts’ estimates. Sales rose 4.3 percent to $24.8 billion, topping projections.
Home Depot’s same-store sales, which includes revenue only from established stores, rose 4.2 percent, with an increase in the number of transactions driving most of the gain. Analysts projected a 3.5 percent gain, according to Consensus Metrix.
That measure is especially important to Home Depot because it has basically stopped opening new stores— once a key driver of its growth— and is now focused on increasing revenue through Web purchases and getting more out of its existing locations.
Same-store sales will increase as much as 4.9 percent this year, the company said. That’s up from a forecast of a gain as high as 4.6 percent that the retailer provided in May.
Home Depot announced the purchase of Interline for $1.63 billion last month, part of a strategy of selling more supplies to customers in the building and maintenance professions. The Jacksonville, Florida-based company markets and distributes products such as Barnett pro contractor supplies and Wilmar janitorial equipment through 90 locations.
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