Big-Ticket Consumer Spending Remains Solid at Home Depot

Wide-moat

The better-than-expected results led management to raise its full-year guidance. For 2015, sales are forecast to rise 4.2%-4.8% (from 3.5%-4.7%), comps are expected to tick up 4%-4.6% (from 3.3%-4.5%), helping to deliver earnings per share of $5.24-$5.27 (about a dime higher than prior estimates at the midpoint). We had previously modeled revenue growth of 4.8%, comp growth of 4.5%, and earnings per share of $5.19, at the high end or above prior company expectations, but will be revising these figures upward in response to today's results. In addition, expense growth should be slower than previously expected at 35% of revenue (versus 40%), boosting operating margin potential over the remainder of the year. We can't see much reason to amend our top-line growth down for the remainder of the year in light of the continued strength in the repair and remodel market we expect, which is likely to push our estimates just above the company's outlook in both the revenue and earnings categories.

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