Home Depot (HD) on Tuesday reported better-than-expected first-quarter earnings and raised full-year guidance as the company benefits from the robust housing recovery.
The No. 1 home improvement retailer earned 83 cents a share in Q1, up 28% vs. a year earlier, according to Thomson Reuters. Revenue rose 7% to $19.1 billion.
Analysts expected EPS of 77 cents on sales of $18.69 billion.
Home Depot rose 2.5% to 78.71, hitting a new high on the stock market Tuesday.
Smaller rival Lowe's (LOW), which reports Wednesday, rose a fraction. Its earnings and sales fell in two of the prior three quarters.
Home Depot's better-than-expected results came as the housing recovery offset the impact of a colder winter than last year.
"Last year, we had modest assistance from housing as it started to improve. This past quarter, it was somewhat stronger than we anticipated," said CEO Frank Blake in a post-earnings conference call.
He also pointed to "outperformance" in the company's professional segment, which had been underperforming.
Same-store sales rose 4.3% — 4.8% in the U.S. All departments improved outside gardening, which was hurt by cold weather.
Most major markets in the West saw double-digit same-store gains, Blake said on the call.
Superstorm Sandy contributed more to sales than Hurricane Irene did in 2011, CFO Carol Tome said. "As the rebuilding continues, we believe we will see additional storm sales in the current quarter," she said.
Blake said hard-hit housing markets such as Florida, Arizona and Nevada "are starting to return to more normal performance. We're really selling across the store there.
Citing the booming housing recovery, Home Depot executives raised full-year forecasts. The retailer predicts 17% EPS growth with sales rising 2.8% and same-store sales 4%.
The company in Q1 opened just one store, in Mexico, for a total of 2,257.
S&P Capital warned that the Federal Reserve, which has helped housing by keeping mortgage rates low, could become a head wind if it starts to rein in its asset-buying program. "Refinancing activity would likely slow should interest rates rise, hurting remodeling," S&P said, reiterating its sell rating on Home Depot.
Fed Chairman Ben Bernanke will testify before Congress Wednesday.