Home Depot (NYSE:HD), the world's largest home improvement chain, posted higher-than-expected quarterly profit and sales and raised its full-year forecast, helped by healthy spending among wealthier Americans in an improving housing market.
Net income rose to $1.6 billion, or $1.21 per diluted share, in the period ended May 3, compared with net income of $1.4 billion, or $1.00 per diluted share, a year earlier, the Atlanta, Georgia-based company said in a statement today.
Stripping out a benefit of $71 million from the settlement of a tax audit, Home Depot earned $1.16 a share, topping the $1.15 average estimate of 27 analysts polled by Capital IQ.
Sales rose 6.1 percent to $20.89 billion, above the Wall Street consensus of $20.81 billion.
Sales at U.S. stores open at least one year--a key yardstick of success in retail--were up 7.1 percent from the same-period last year. Analysts, on average, had expected a 5.5 percent rise, according to financial analytics firm Consensus Metrix.
Home Depot benefited from the continued rise of U.S. housing prices and the early arrival of warm weather, which spurred Americans to work on their homes’ exteriors. The spring is Home Depot’s biggest revenue generator -- even more important than Christmas.
“We had a stronger-than-expected start to the year as we experienced a more normal spring across much of the country and continued recovery of the U.S. housing market,” chief executive officer Craig Menear said in the statement.
Fresh data released by the Commerce Department today underscored the homebuilding industry’s health. U.S. housing starts surged 20 percent in April to the highest level in more than seven years.
Home Depot raised its profit forecast for the year ending in February 2016 to between $5.24 and $5.27 per share including items, from $5.11 to $5.17. Wall Street was looking for $5.23 per share.
It also increased its full-year sales growth outlook to between 4.2 and 4.8 percent, from 3.5 to 4.7 percent.
Shares were down 1 percent at $113.23 after rising to as high as $116.48 earlier. The stock has gained 48 percent over the past year.