Home Depot Inc Earnings Model (Reddy)
Author: Rithvik Reddy, Published: February 17, 2020 10:15pm, Category: Earnings Preview (Prior to Fiscal 4Q2019 earnings)
Summary of Model: The following model projects Home Depot’s (NYSE: HD) fourth-quarter earnings for 2019 based on key metrics from earnings conference call transcripts, management guidance, and analyst estimates. The key drivers included in this model are comparable store sales, the 2019 holiday shopping season, commodity prices as well as strategic initiatives. I project comparable store sales increases in 2019Q4 to 5.0% due to a well-performing holiday shopping season including Black Friday and Cyber Monday weekend(a record $34.4bn this season). There is also an overall acceleration caused by the absence or reversal of pressures from 2019Q3 in 2019Q4 such as lumber deflation, FX, event timing shift. The commodity factors also contribute to a decrease slight increase in gross margins to 34.1%. Finally, I expect lower-than-projected SG&A expenses due to the continued performance of management and their effective cost/tariff control strategies to this point.
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.