3 weeks ago
Stock Market

Home Depot Slumps 3% on Profit Miss, Forecast for Slowing Sales

Investing.com - Shares of Home Depot (NYSE:HD) fell around 3% in premarket trade Tuesday after

Investing.com - Shares of Home Depot (NYSE:HD) fell around 3% in premarket trade Tuesday after it reported worse-than-expected profit for the fourth quarter and gave a disappointing outlook for the current year.

The home improvement retailer booked a pre-tax charge of $247 million against its Interline Brands business, and also reported a rise of only 3.2% in comparable store sales for the quarter, falling below the Bloomberg consensus estimate of 4.5%.

It said comparable sales growth this year would be around 5%, down from 5.2% in fiscal 2018.

However, the company also raised its quarterly dividend by 32% to $1.36 a share, and said it had authorized a new $15 billion stock buyback program. It expects to execute around a third of that in fiscal 2019.

The Dow component reported diluted earnings per share of $2.09 on sales of $26.5 billion. Analysts polled by Investing.com expected EPS of $2.16 on revenue of $26.58 billion. The Interline impairment knocked 16c off diluted earnings per share.

Concerns over the strength of the U.S. housing market have weighed on Home Depot, as home price growth has slowed and existing home sales have stagnated. Home-builder confidence fell to a three-and-half year low in December due to higher mortgage rates and some fear the softening market could be an early indicator of a broader slowdown.

The stalled housing market has some investors wondering if home improvement projects will also decline, which could hit Home Depot’s bottom line over the next year."

Home Depot follows other major Services sector earnings this month

On January 31, Amazon.com reported fourth-quarter EPS of $6.04 on revenue of $72.38 billion, compared to forecasts of EPS of $5.65 on revenue of $71.88 billion.

Alibaba earnings beat analysts' expectations on January 30, with third quarter EPS of $12.19 on revenue of $117.28 billion. Investing.com analysts expected EPS of $11.45 on revenue of $119.03 billion.

Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com's earnings calendar