Home Depot — Earnings vs. Expectations
In Home Depot’s Q4 report, the company posted an impressive total revenue of $32.26 billion, a 25.1% increase from the same quarter in 2019, or a bump of $6.5 billion. This figure not only crushed the prior year’s quarter but also beat out analyst expectations by nearly $2 billion with projections at $30.73 billion. At the same time, the increase in business created a major jump in earnings to $2.9 billion, or $2.65 per share. This figure again beat out Wall Street predictions as Refinitiv expected an earnings per share of $2.62.
The major point of growth for the hardware company came from the significant rise in Q4 sales as US same-store sales grew by an impressive 25%, with overall same-store sales not far behind, growing by 24.5%. Both of these numbers were well above the projected 19.2% growth that a survey of analysts had predicted. Average purchases from customers also rose by 11%.
Another partial reason for the company succeeding at such a high level in Q4 may also be the COVID-19 pandemic. While businesses of all types remained closed or at limited capacity for much of the year, Home Depot was deemed an essential retailer, allowing the company to be open with limited capacity all of 2020.
Due to the growth in business, Home Depot’s board of directors approved a 10% increase in its quarterly dividend, rising to $1.65 per share.
Future Business Outlooks and Stock Market Response
While the COVID-19 pandemic may have been a major source of increased business for the hardware company, it has also resulted in major uncertainty for what 2021 holds for Home Depot. Due to this uncertainty, the company did not provide any 2021 guidance, leading to uneasiness from investors looking for an optimistic future. As a result of this, the business has seen shares drop by over 2% in pre-market trading.
In a statement released with the Q4 report, Chairman and CEO of the company, Craig Menear, said, “The team demonstrated ongoing flexibility to operate effectively in a very challenging environment and deliver record-breaking sales and earnings. Our ability to grow the business by over $21 billion in fiscal 2020 is a testament to both the investments we have made in the business as well as our associates' unwavering commitment to our customers.”
About the Author
Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.