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The Home Depot Jumps on Earnings Beat

Shares of The Home Depot Inc. (NYSE:HD) were 2.31% higher at $212.76 in premarket trading on Tuesday after the company beat consensus estimates on earnings for the second quarter of fiscal 2019 by 9 cents. The company posted $3.17 per share, which was nearly 4% higher year-over-year.

Revenue was $30.84 billion, up 1.2% from the prior-year quarter but $140 million short of expectations.

The Atlanta, Georgia-based home improvement retailer posted 3% growth in comparable-store sales and a 3.1% rise in comparable U.S. store sales.

Moreover, customer transactions were flat at $455.5 million, the price per average ticket increased 1.7% to $67.31, and sales per square foot grew 1.1% to $509.55.

The Home Depot operated a total of 2,291 stores in the second quarter of 2019 versus 2,289 stores in the first quarter of 2019 and compared to 2,286 stores in the second quarter of 2018.

"We are encouraged by the momentum we are seeing from our strategic investments and believe that the current health of the U.S. consumer and a stable housing environment continue to support our business," President and CEO Craig Menear said.

Looking ahead to full fiscal 2019, the company guided for 2.3% growth in total sales and 4% growth in comparable-store sales from full fiscal 2018. Earnings per diluted share are expected to rise 3.1% to $10.03 versus consensus estimates of $10.10.

The balance sheet of The Home Depot had $2.55 billion in cash and equivalents, and $27.06 billion in total debt as of Aug. 4.

The Home Depot closed at $207.9 per share on Monday, for a market capitalization of $228.80 billion. The stock has climbed 4% over the past year through Aug. 19 to above the 200 and 100-day simple moving average line. The share price is still slightly below the 50-day SMA line.

The 52-week range is $158.09 to $219.30.

Analysts issued an overweight recommendation rating for shares of The Home Depot Inc. The average of analysts' price targets is $212.68, indicating the share price is forecasted to rise 2.3% within 12 months.

In addition to second-quarter results, the cash quarterly dividend that The Home Depot Inc. pays to its shareholders is currently $1.36 per common share, for a 2.67% forward dividend yield versus the industry median of 2.98% and versus the S&P 500 index's yield of 1.92%. Yields are as of Aug. 19.

Disclosure: I have no positions in any security mentioned.

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