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Home Depot Reports Good 4th-Quarter and 2020 Numbers

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GuruFocus.com
·3 min read
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- By Mayank Marwah

Home Depot (NYSE:HD) released its fourth-quarter results before the opening bell on Feb. 23.

The home improvement retailer reported impressive quarterly results that edged past Wall Street's earnings and revenue projections, driven by double-digit growth in customer transactions, average ticket size and sales per retail square foot.

Earnings results


Home Depot reported earnings per share of $2.65 in the fourth quarter, up 16.2% on a year-over-year basis. Analysts had anticipated EPS of $2.62. Revenue of $32.26 billion jumped 25% from the same period last year. This was also more than the forecasted $30.73 billion.

For fiscal-year 2020, revenue amounted to $132.1 billion compared to $110.2 billion in 2019. GAAP earnings were $12.9 billion, translating to $11.94 per diluted share. That compares with $11.2 billion, or $10.25 per share, recorded in 2019.

Comparable store sales surged 24.5% in the fourth quarter versus the anticipated growth of 19.2%. U.S. comps were up 25%, aided by a 10% increase in average purchases.

Reflecting on the company's performance, Chairman and CEO Craig Menear said:


"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. We continue to lean into these investments because we believe they are critical in enabling market share growth in any economic environment. I am proud of the many ways our associates lived our values by serving our customers, communities and each other during these unquestionably challenging times, and I would like to thank them and our supplier partners for their extraordinary efforts."



The board of directors of the company announced a 10% spike in its quarterly dividend to $1.65 per share. The dividend will be payable to the shareholders on March 25. This will mark the 136th successive year of dividend payments.

Over the course of the pandemic, the hardware store chain has expanded paid leave for both hourly and non-hourly workers. Moreover, the company reported it provided hazard incentives in the form of doubled overtime pay and weekly bonuses to keep workers from quitting. The company announced it will spend roughly $1 billion towards frontline and hourly associates' bonuses and compensation on an annualized basis.

Home Depot acquires HD Supply

Home Depot re-purchased its former unit and industrial wholesale giant HD Supply Holdings (NASDAQ:HDS) during the fourth quarter in a deal valued at about $8 billion. The company said it used a combination of cash on hand and debt to finance the purchase of HD Supply. Back in 2007, the company spun off HD Supply to a group of private equity firms comprised of Carlyle Group, Bain Capital and Clayton, Dubilier & Rice.

By virtue of this acquisition, Home Depot looks to magnify its footing in the $55 billion marketplace for MRO (maintenance, repair and operations) products.

Looking ahead

Going forward, the company says that customers are expected to take up more indoor as well as outdoor projects in the near term, which could be beneficial for the business.

The Atlanta-based retailer did not provide any earnings or revenue outlook for fiscal 2021.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.