Home Depot Inc Earnings Model (Khandelwal)
Author: Shivam Khandelwal, Published: February 17, 2020 10:03pm, Category: Earnings Preview (Prior to Fiscal 4Q2019 earnings)
Summary of Model: This revised earnings model is based on three factors from Home Depot's (HD) reported Earnings Call for Q3: increase in big-ticket company transactions, resistance to commodity prices for lumber and copper increasing, and record-breaking holiday shopping season of 2019. I took a bullish approach to this model by including a somewhat lower % of Gross Sales and an average value for SG&A as a % of sales. This, in turn, will lead to approximately $300 million increase in net sales compared to management's guidance. Home Depot will experience growth but will be slowed by variables such as tariffs and increasing commodity prices.
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Disclosure of Potential Conflicts of Interest: The author of this article/model has no financial investment or other conflict of interest related to the subject company or other companies discussed. Any views made or implied in the content represent the author’s opinions.