HD

Home Depot, Dick’s Sporting Goods Report Strong 3Q Results

by

Tuesday brought a couple solid reports from the consumer discretionary sector (XLY). Home Depot (HD), which we think is a better operator than peer Lowe’s (LOW), posted an impressive comparable-store sales increase during the third quarter, while Dick’s Sporting Goods (DKS) showcased a strong high-teens pace of top-line expansion in the period. Our reasoning behind Home Depot’s operating superiority relative to Lowe’s is worth repeating. For starters, the most important metric to judge a business is return on invested capital (ROIC), or the amount of earnings (before interest) that a firm generates divided by the amount of capital that it must hold in the business in order to generate that earnings stream. Return on invested capital is not a pure … Read more

Apple Hacked! Not Alone.

by

By Brian Nelson, CFA It’s difficult to be a business these days. Not only do you have to provide a service that customers are willing to pay for, but your customers have to have the means to pay for it. But more and more, we are seeing that businesses have more obstacles to overcome, and I’m not just talking about increased regulations. I’m talking about hackers, and their work is becoming more and more prevalent. Target (TGT) continues to be distracted from its credit data breach, while eBay (EBAY) recently reported a cyber attack, though of the less-serious variety. This week, reports indicate that Home Depot (HD) has been the target of a massive credit card data breach. Though admitting … Read more

Home Depot’s and Lowe’s Performances Diverge

by

Home Depot (HD) and Lowe’s (LOW) reported calendar second-quarter results this week. Home Depot continues to execute better than its peer, with the company witnessing strong performance in its spring seasonal business and across all geographies during the second quarter. Home Depot’s comparable sales growth of 6.4% in the US was also a full two percentage points better than Lowe’s second-quarter performance. Home Depot also upped its outlook for the remainder of the year, showcasing fantastic double-digit bottom-line expansion: Based on its second quarter performance and its outlook for the year, the company raised its fiscal 2014 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 20.2 percent to $4.52 for the year. This earnings-per-share guidance includes … Read more

Valuentum Economic Castleâ„¢ Rating Update

by

Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Thank you…

by

By Brian Nelson, CFA Earlier this week, I received an email from a colleague and valued member of our services. I wanted to share it here for others to read. I haven’t included his name, but if he wants me to, I can add it in. It is filled with wisdom, experience and kindness. And it really made my year to read his words. The Valuentum community, I believe, is the best community of investors out there. Sir, if you do happen to read your own email on our site, we very much have appreciated your feedback, and we hope to continue to live up to your praises. We are dedicated, and our team has been rejuvenated by your words. … Read more

Home Depot Posts Solid Fourth Quarter Results, Hikes Dividend

by

The world’s largest home improvement retailer reported solid fourth quarter results Tuesday. Comparable store sales advanced 4.4% in the period, while comp sales for US stores jumped 4.9%. Adjusting for the extra week in the same quarter a year ago, net earnings jumped nearly 20% in the fourth quarter, a very impressive showing. 2013 marked the company’s strongest comparable store sales growth in 14 years thanks in part to solid execution and a recovering housing market. Free cash flow for the year totaled $6.2 billion, about 7.9% of sales and up from $5.7 billion last year. Thanks to the strong cash flow performance, Home Depot increased its quarterly dividend to $0.47 per share ($1.88 per share on an annual basis, representing … Read more

Home Depot’s Third-Quarter Performance Better Than Lowe’s

by

On Tuesday, Home Depot (HD) reported excellent third-quarter results. Total sales advanced 7.4% from the third quarter of last year as comparable store sales jumped by a similar amount – comparable sales for the US were 8.2%. Operating income jumped an impressive 32.3% from the same period a year ago, while net earnings for the period increased 28.4% on an adjusted basis, to $0.95 per share. The top-line strength and significant operating leverage was on display during the quarter, and Home Depot was quite positive for the remainder of fiscal 2013, too: Based on year-to-date performance and outlook for the remainder of the year, the company raised its fiscal 2013 sales guidance and now expects sales to be up approximately … Read more

Bed Bath & Beyond Rides the Housing Wave

by

Wednesday afternoon, home goods retailer Bed Bath & Beyond (click ticker for report: ) posted solid second quarter results thanks to an improving housing market. Revenue increased 8.9% year-over-year to $2.8 billion, slightly above consensus estimates. Earnings-per-share of $1.16 was an improvement of 18% compared to the year-prior and a penny above consensus expectations. Year-to-date, free cash flow sits at $365 million, equal to 6.7% of revenue. Comp Sales Growth Image Source: Company Filings, Valuentum Comparable sales growth accelerated during the second quarter, registering a number that was 3.7% higher than that of the previous year. The two-year stacked comp for the period sits at 7.2%, which we believe is a solid growth rate in a modest retailing environment. Management offers … Read more

Huge Improvement in Home Improvement; Lowe’s Losing Market Share

by

Earlier this week, the US’ two home improvement giants, Home Depot (click ticker for report: ) and Lowe’s (click ticker for report: ) posted robust second-quarter results, riding the housing recovery to success. Let’s dive into recent performance. Home Depot Home Depot’s second-quarter sales were 9.5% higher than a year ago at $22.5 billion, handily exceeding consensus estimates. Earnings per share jumped 23% year-over-year to $1.24, also higher than consensus expectations. Free cash flow stands at $4.1 billion year-to-date, equal to 9.9% of total revenue. Source: Valuentum, Company Filings Same-store sales expansion at Home Depot during the second quarter was fantastic, as total same-store sales jumped 10.7% year-over-year driven by an 11.4% growth rate in the US. Some sales of … Read more

Taking a Look at Retail

by

The first quarter earnings season for retail has certainly been a bit of a mixed bag. Two of the largest retailers in the US, Wal-Mart (click ticker for report: ) and Target (click ticker for report: ) reported negative same-store sales revealing cautious spending patterns from American consumers. On the other hand, home improvement giant Home Depot (click ticker for report: ) registered wonderful sales gains as the firm continues to ride the housing recovery. Let’s take a look at the results of some retailers leveraged to discretionary income. Urban Outfitters                                                Urban Outfitters (click ticker for report: ) posted a solid first quarter, even though its revenue was slightly lighter than expected. Revenue rose 14% year-over-year to $648 million, driving … Read more