The Home Depot (HD) will report first quarter (April) results tomorrow at 6:00 AM and management will host a call at 9:00. 

The first and second quarters represent the company's seasonally strong period which coincides with an uptick in the housing market and gardening items.

Analysts expect first quarter EPS up 5% with revenue up 5.6%, comp sales up 4.1% and gross margin down 40 basis points. 

Management blamed soft fourth quarter comp sales on cool, wet weather. Unfavorable weather is likely to weigh on first quarter results as well. 

Home Depot's results held up relatively well when the housing market slowed last Fall. Management noted that home equity gains for consumers remain a tailwind. 

Home Depot has guided for fiscal year EPS +3.1% to $10.03 with sales up 3.3%, comparable store sales up 5.0%, gross margin 34% and operating margin 14.4%.

Earnings guidance was initially below estimates. Management tends to guide conservatively, but additional tariffs could weigh on the bottom line. Prior duties were deemed manageable. Analysts expect comp sales grow of 4.7% this year, which would mark the slowest growth in seven years.

The company's 2020 financial targets include total sales of $115-120 billion, with annual sales up 4.5-6.0% and an operating margin of 14.4-15.0%.


With a $212 billion market cap, Home Depot trades at ~19x EPS estimates. Home Depot has consistently outperformed rival Lowe's (LOW), which reports on Wednesday and trades at ~18x EPS estimates.

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