Home Depot shares jump after earnings rise

Shares in the DIY retailer have advanced 3% today after the company reported better-than-expected fourth-quarter earnings and a big hike in its quarterly dividend.

Home Depot’s share price has faltered somewhat this year after a couple of years of almost relentless gains: its value gained more than 90% over the two-year course of 2012 and 2013.

The company sells a huge selection of products in the home-improvement field to both professional consumers and the DIY market and therefore profited greatly from the housing recovery that accompanied the Fed’s accommodative monetary policy.

The housing market has slowed somewhat in recent months though, as higher mortgage rates and home prices have begun to weigh. Added to this has been extremely cold weather this winter which has hampered home sales and the wider economy in general.

Home Depot said today that it earned $1.01 billion or $0.73 per share in its fourth quarter, comfortably higher than earnings of $0.68 per share in the same period last year and surpassing the $0.71 per share that had been expected by Wall Street analysts.

The company missed estimates for revenue, though, with sales falling 3% to $17.7 billion versus a consensus estimate of $17.92 billion. The quarter was one week shorter than the year before. Sales for US stores open at least a year were up 4.9% though.

The DIY chain offered a lower  fiscal outlook for 2014 than analysts had predicted, but raised its quarterly dividend by 21%.

Home Depot shares were up 3.1% by mid-afternoon in New York. Competitor Lowe's reports tomorrow.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.